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EDITORIAL

Editor-in-ChiefHH Sayyid Tarik Bin Shabib

Group EditorMayank Singh

Assistant EditorVisvas Paul D Karra

DESIGN

Senior Art DirectorSandesh S. Rangnekar

Art DirectorMinaal G. Pednekar

Senior DesignerM. Balagopalan

Senior PhotographerRajesh Burman

PhotographerSathyadas C. Narayanan

Concept and Cover DesignChanjeet Singh

Production ManagerGovindaraj Ramesh

MARKETING

Business HeadJacob George

Senior Advertising ManagerAvi Titus

Advertising ManagerArif Abdul

Assistant Advertising ManagerJinu Mathew Varghese

CORPORATE

Chief ExecutiveSandeep Sehgal

Executive Vice PresidentAlpana Roy

Vice PresidentRavi Raman

Senior Business Support ExecutiveRadha Kumar

DistributionUnited Media Services LLC

OER Presentations

Published byUnited Press & Publishing LLCPO Box 3305, Ruwi, Postal Code - 112Muscat, Sultanate of OmanTel: (968) 24700896, Fax: (968) 24707939Email: publish@umsoman.comWebsite: www.umsoman.com

All rights reserved. No part of this publication may be reproduced without the written permission of the publisher. The publisher does not accept responsibility for any loss occasioned to any person or organisation acting or refraining as a result of material in this publication. OER accepts no responsibility for advertising content.

Copyright © 2010 United Press & Publishing LLCPrinted by Oman Printers

Correspondence should be sent to:Oman Economic ReviewUnited Media ServicesPO Box 3305, Ruwi 112, Sultanate of OmanFax: (968)24707939Email: editor@oeronline.comWebsite: www.oeronline.com

No 122 September 2010

Chief Financial Officer (CFO) as a leader who has the capacity to look

beyond the numbers and to observe and influence the health and culture

of a workplace can be as important to an organisation as the CEO. The

recent business failures in the US and Europe has seen the role of the

CFO coming into sharper focus. A skilled CFO is not just responsible for

financial reports but he is also in a good position to detect early signs of bad health and

poor culture. The CFO’s role is particularly crucial in ensuring the integrity, openness

and honesty of an organisation because finance more than any other function is involved

right across a company. While the CEO determines the key drivers of the business, the

CFO designs the key indicators of those drivers and ensures their integrity.

CFOs aren’t particularly known for moving out of the comfort zone of the books they

keep, but the credit crisis provided them that challenge or – as some finance heads

would like to see it – the opportunity to move out of their traditional domain. Cash,

costs, communication, confidence. Those four Cs sum up the mandate of the CFO in

a year (2008-09) when everything that could go wrong – and also things that many

thought would never go wrong – went spectacularly awry. And it was for the CFO to step

into the breach like never before. As demand and liquidity dried up, cash flows had to be

expanded. As margins came under a squeeze, costs came under the microscope.

The CFO had to scrounge for capital in a world starved of that till-recently taken-

for-granted resource. Suddenly, the rules of the game had changed: Finance heads

who once had little problems raising funds to make big-ticket acquisitions were now

struggling to find capital to keep those assets afloat and squeeze growth out of them in

recession-hit markets.

That’s when the other two Cs moved up in priority in the CFO’s lexicon. Investors,

vendors, customers and employers had to be first told about the realities in the market

place and on the balance sheet and then confidence instilled into them that this too

would pass. CFO’s in Oman have played a similar role to steer their companies through

rough times. Our cover story captures the experience of a cross section of these business

leaders, who are truly the superheroes of our times.

CFOs – THE ROCK STARS OF OUR TIMES

Mayank Singh

To read, click on link at: www.oeronline.comOER -magazine

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4 September 2010

INFORMATIVE REPORTINGThe cover story ‘Leadership in times of turbulence’ in the August 2010 issue of Oman Economic Review was timely and informative. It was really interesting to read how captains of different industrial houses in Oman managed to stay on course during turbulent times. While many of the industrial behemoths all over the world laid-off workers following the global economic slowdown, industrial houses in Oman did not sack many employees. It was really inspiring to read that Omani companies like the Al Sulaimi Group actually recruited workers.

This definitely shows the strength of Oman’s economy and professionalism of Omani companies. Some of them like Vision Investment Services took steps to

boost the morale of employees by being transparent on the company’s performance, creating a fun environment and helping workers to focus on opportunities. There is no doubt that leaders of industry in Oman showed the vision and ability to assess the crisis with an open mind and find ways to come out of it. Congratulations to OER for publishing such stories which are sure to inspire Omani entrepreneurs to do better in the coming days.

Kumar A, Hamriya

MISLEADING

I am regular reader of your magazine. But, of late, the quality of the articles is coming down. For instance, the cover story ‘Leadership in times of turbulence’ is misleading. In Oman, we are yet to

fully tap the potentials of our executives. A leader’s skills depend on a variety of factors such as the ability to work under stress, overcome complex situation, inculcate team spirit etc.

My suggestion is to give a questionnaire to industry chiefs. It will be better to develop three or four models and ask them which is ideal for them. Besides informal interviews with employees, customers, bankers etc will also add to the quality of the discussion.

Raman, Engineering Manager,

Oman National Transport

Write to us with yourcomments/feedback at: editor@oeronline.com

I read your cover story ‘Leadership in times of turbulence’ of the August edition with great interest. There is something to learn from the thought-provoking and interesting insights shared by leaders of various industries in Oman. It was a good learning opportunity, I must say.

To me, business is basically managing other people’s money. There is a great leadership role to make this happen in a professional way, for which everyone involved in the trade should be brought into confidence – top management, stake holders, employees and customers.

Since recession was quite unforeseen as it was never experienced in the recent past, it was the perfect time for many individuals in the business to showcase their leadership ability at a crucial situation like this. The wisdom and insights are paid off genuinely if the actions are planned and implemented appropriately.

One of the most difficult tasks for any leader is managing its workforce. A full-fledged action plan is required to achieve this task, especially when the world economy became a

victim of the downturn. This requires support from all corners. A strong resource management would cater to the requirements of any organisation at any given point of time. Recognising and rewarding employees during crisis would also help retaining the morale within.

Customers should be the next focus, as they greatly depend on organisations to run their business. Some of the experiences shared in the article have clearly endorsed this fact.

Leadership should also have the ability to observe things happening outside the organisation and could learn from examples. Since recession has not seriously affected business

in Oman, it clearly proves that good leadership can make difference at critical occasions.

Taking good decision is one of the best qualities of a matured leader.

Ramachandran Nair, Manager - Quality Development, Gulf

Agency Company (Oman)

THOUGHT-PROVOKING

6 September 2010

22PERISCOPEWhat next for India FundRise in savings and massive infrastructure spending will reduce India’s dependence on exports and keep its economy robust

62INFORMATION TECHNOLOGYOn cloud nineThe Middle East IT market has grown responding to technological developments and innovations

MANAGEMENTKindness is free

Tom Peters, the acclaimed management guru, talks about what corporate

leaders need to do during times of economic turbulence

80

OER EVENTNima to anchor

OER debateOER Debate and Top 20 Awards to be held

in October will have more than 200 corporate captains debating about the way ahead

for Oman’s economy

20

PERSONALITYLive the

present momentEric Kerboriou, Marketing Director,

Nawras lives a diverse and colourful life both personally and professionally

56

60REAL ESTATEKey to avoid a double dipOver supply of housing has been so huge that some economists are advocating demolishing whole neighborhoods to take supply off the market

68VIEWPOINTSurvival and growthThe financial crisis has highlighted the need for companies to develop a plan of action to capitalise on opportunities

C O V E R S T O R Y

THE TRUE PERFORMERS 26

INSIDE

8 September 2010

96ENVIRONMENTTowards a better tomorrowPark Inn hotel recently won an award for its green activities, as a testament to the efforts to go green

99BEYOND BOARDROOMSSky is the limitSahar Askalan, the first woman to start a legal firm in Oman, is now aiming to build it up as an international Omani firm

By Kannan MuraliCARTOON CORNER

Editorial 2

Economy Watch 10

Business Briefs 12

Executive Movements 19

Passing By 78

Auto News 88

Golf Update 90

Billboard 92

Market Watch 94

Gizmos 95

Browsing Corner 98

72HEALTHCAREA shot in the armThe Sultanate faces several challenges in the health sector despite commendable success on several fronts

86 AUTO TALKRenault Fluence

82ECONOMYThinking AheadEOR techniques gave a boost to the hydrocarbon production of Oman leading to a healthy energy sector

INSIDE

10 September 2010

NUMBERS

GCC Retail Industry OutlookThe rise in population, urbanisation, middle class (with increasingly higher per capita income), inflow of tourists and number of passengers in transit continue to provide congenial conditions for retail to develop in the GCC countries. Alpen Capital expects Gross Leasing Area (GLA) addition of approximately six mn sq m in the GCC retail space in 2010-12. Looking at the region as a whole, we see demand growing at a sufficient pace to absorb the healthy pipeline of new space. That said, some cities, Dubai in particular, will depend on continued strong growth in tourism to absorb the incremental retail space.

Alpen Capital expects the non-discretionary retail segment to continue to register healthy growth momentum in 2010 while the discretionary segment is likely to remain subdued. It expects a revival in demand generated from tourists and passengers in transit to provide a further boost to retail sales in 2010. Further, pharmaceuticals and online retail presents latent growth potential.

Alpen Capital expects GLA addition of approximately six mn sq m in the GCC retail space in 2010-12 leading to GLA growth at CAGR of 14.5 per cent. Though given the uncertain economic environment, it is difficult to determine the timing and the success of these projects. Although the GCC region has witnessed a huge expansion in organised retail space over the last decade, the per capita GLA is still very low compared to developed market, with the exception of Dubai. Looking at the region as a whole, the report sees demand growing at a sufficient pace to absorb the healthy pipeline of new space.

Source: Alpen Capital

GLA addition by country: 2010-12

UAE Saudi Arabia Oman Kuwait BahrainQatar

60%

50%

40%

30%

20%

10%

0%2010E 2011E 2012E

GLA (mm sq m) addition by year: 2010-12

0

0.5

1.0

1.5

2.0

2.5

3.0

2010E 2011E 2012E

Retail sales growth estimates

0%

2%

4%

6%

8%

10%

12%

2010E 2011E 2012E

12 September 2010

DAR AL ATTA’A DISTRIBUTES FOOD PARCELSThe charity organisation Dar Al Atta’a distributed over 2,800 food parcels to disadvantaged families all over the Sultanate in conjunction with HSBC, Omantel and Bank Sohar. They helped many families across Oman in Sedab, Seefah, Al Saib, Saham, Sohar, Al Musinah, Al Khaborah, Al Sweeq, and Barka in Al-Batinah region; and in Nizwa, Samail, Bid Bid, Izki, Ibri, Yanqel and Dhofar; Qurayat, Samail, Sedab and Seaa.

BAE SYSTEMS SECURES £500MN ORDER FROM INDIAIn a move underlining the importance of BAE Systems’ presence in India, the company has secured a new order, worth over £500mn, with Hindustan Aeronautics Limited (HAL). The order is to supply products and services to enable a further 57 Hawk Advanced Jet Trainer (AJT) aircraft to be built under licence in India for the Indian Air Force (40 aircraft) and Indian Navy (17 aircraft).

CBFS WINS ASIA’S BEST B-SCHOOL LEADERSHIP AWARDThe College of Banking and Financial Studies (CBFS), Oman received the Asia’s Best B-School Leadership award by the Chief Marketing Officer (CMO) Council, at the ceremony held at Suntec, Singapore recently, represented by 29 Asian countries. The CMO award are the first of its kind accolades recognising organisations, professors and professionals from the greatest B-Schools of Asia who have shown leadership in their respective fields combined with consistent innovation.

Renaissance Services has recently signed a syndicated term loan facility of RO19.25mn arranged by BankDhofar as a lead bank and with the participation with National Bank of Oman (NBO). The remaining tranche of RO19.25mn is arranged with another leading Omani bank and the facility will be signed soon. The term funding facilities will be used to meet the company’s investment plans primarily in

its offshore support vessel (OSV) operations. The support of the company’s banking partners, in particular from banks in its home market of Oman, plays a significant role in implementing Renaissance’s coming three year investment plan of RO522mn over 2010-2012.

BankDhofar has recently been selected as the best bank in Oman by pre-eminent international finance magazine

Euromoney, and NBO is one of the largest banks in the country. Renaissance shares strong and long-standing relationship with both banks.

During the last nine months Renaissance has invested over RO57mn in assets corresponding to its growth areas, primarily in its OSV services and building of permanent accommodation facilities in the sultanate’s interior.

Renaissance gets RO38.5mn term funding

Petroleum Development Oman (PDO) signed an MoU with HE Hilal bin Said al Hajri, Wali of Ibri, to fund a project to utilise treated water in the village of Hamra Al-Duru for greening public roads in the area. The project is aimed at the utilisation of large amounts of treated water currently produced by the existing water treatment plant at the village of Hamra Al-

Duru for plantation purposes and greening of public roads in the village. The project will include the provision of two 5000 gallon tanks, and installation of pumps and pipelines connecting the plant to the tanks and plantation sites.

Meanwhile, PDO in cooperation with the Ministry of Interior recently completed

a project to build a Reverse Osmosis (RO) plant to provide drinking water to the village of Al Furjah in the Wilayah of Ibri. PDO funded the construction of the RO plant to provide clean drinking water for the town of Al Furjah, under the sustainable development budget of PDO’s Mabrouk field development project located in the vicinity of the village.

PDO funds treated water utilisation

14 September 2010

YAMAHA SPONSORS 40TH RENAISSANCE DAY RIDEThe Oman Riders Club led a convoy of motorbikes through Muscat in a celebratory ride, in honour of His Majesty Sultan Qaboos Bin Said, paying tribute to the 40 years of the Renaissance. All 50 of the bikers congregated at the Oman Automobile Associations headquarters then made their way safely through the city to the Al Falaj Hotel. Along the way the group of Omani bikers stopped at the Zubair Automotive showroom in Azaiba as well as Muscat’s iconic Palace in Muttrah before arriving at their destination.

OMAN WINS CERTIPORT’S WORLD CUPOman has been declared Certiport’s 2010 IC3 world cup winners. Through Global Skills, an Omani company with worldwide capabilities in vocational education and training, Oman competed against more than 100 countries, including Japan, US, Egypt, Greece and even China in a race towards digital literacy. This is the first time in the history of the competition that a Middle East country has won.

GOOGLE TECHCAFE HELD IN MUSCATGoogle along with Gulf Infotech, a Google Enterprise Partner for Oman had a successful event in Oman focussing on Google Enterprise Solutions and the upcoming Technology called cloud computing. Google Enterprise Solutions is focused on the corporate and enterprise clients to improve their search, messaging and collaboration. Google Apps is Google’s Enterprise Messaging Solutions which is completely Cloud (Internet)-based.

The iconic headquarters of BankMuscat crystallising the proud achievements of the leading financial services provider in the Sultanate was unveiled to the media. The management team led by AbdulRazak Ali Issa, Chief

Executive, interacted with the media, which was taken on a guided tour of the landmark corporate headquarters in Seeb. BankMuscat’s purpose-built headquarters incorporates the latest technology and trends, meeting the

key requisites in terms of functionality, security and Business Continuity Planning (BCP) requirements. A notable advantage of the headquarters is the vantage location, making it very convenient for the bank staff as well as customers.

BankMuscat all set to move to iconic HQ

Muscat Securities Market (MSM) announced its support to the upcoming Oman Capital Market Forum, which will be held on September 28 and 29 at the Al Bustan Palace Hotel Intercontinental. A forum designed for like-minded

professionals from the finance and investment sectors, Oman Capital Markets Forum is set to provide opportunities to establish and develop mutual business

relationships, exchange commercial insights, network with key stockholders and learn innovative practices and challenges in the stock market.

MSM supports Oman Capital Markets Forum

City Cinema completed a decade of entertainment last month. Not resting on its laurels, Oman Arab Cinema Company (a part of the Jawad Sultan Group of Companies) announced a number of exciting plans that will change the entertainment

scene in Oman. These include the setting up of two new cinemas in Muscat, a three-screen cinema complex in Buraimi and a three-screen cinema in Salalah. All projects are slated for completion before the end of next year. One of the

prime Muscat projects will also boast of a VIP Cinema, another incredible first from the group, which amongst others will feature leather upholstery and reclining seats, similar to first class comfort in airlines and airport lounges.

City Cinema completes a decade

OER and AIWA are media partners for the event

Samatel, the Sultanate’s newest mobile operator, launched its services for residential and business customers making use of an operating and technology platform provided by Effortel, the mobile virtual network enabler (MVNE). Effortel operates a highly efficient, centralised platform which

has been deployed by mobile virtual network operators (MVNOs) around the world. Effortel provided expertise in business modelling to help refine Samatel’s proposition to its target residential and SME markets. Along with mobile services, Samatel also launched a full fledged contact centre.

Samatel launches mobile services

Oman Air, the national carrier of the Sultanate of Oman announced the implementation of Symantec’s Security Information Manager (SSIM) by global technology solutions and services provider, 3i Infotech. This implementation by 3i Infotech

of SSIM has allowed Oman Air to significantly enhance the security of its IT systems. In March 2010, Oman Air became the first airline in the world to offer both mobile phone and Wi-Fi connectivity in-flight aboard its A330 fleet.

Oman Air gets security information manager

Al Hassan Engineering Company (AHEC) has been selected by GS Engineering & Construction, Korea (GS E&C), a leading international Engineering, Procurement and Construction (EPC) Contractor, to provide the temporary facilities, civil, building works and 132 kV Overhead Line Works with SCADA for Phase 1 of Petroleum Development Oman’s (PDO) Saih Nihayada gas-field depletion-compression project (SNDC). In December 2009, PDO awarded an EPC contract

for the SNDC project to GS E&C who will also undertake the de-bottlenecking of the existing Saih Nihayda Gas Processing (SNGP) plant. In turn, GS E&C has selected AHEC as their sub-contractor.

AHEC wins Saih Nihayada Gas subcontracts

16 September 2010

STANCHART DELIVERS RECORD FIRST HALF PROFIT Standard Chartered announced a record first half operating profit before tax of $3.12bn, demonstrating the ability of the business to deliver consistent and sustained performance. The bank has continued to improve its capital and liquidity ratios, and delivered 10 per cent growth in both earnings per share and dividend per share.

AHLIBANK LAUNCHES NEW WEBSITEIn keeping with its commitment to provide services that are customer-centric, ahlibank has launched its new website which features easy, secure online banking and numerous other banking resources and information.While the web address remains the same, www.ahlibank-oman.com, the website will now allow customers to login to their personal or business online banking accounts. Customers can also read about the bank’s history, upcoming events, news articles, privacy policies and services offered, including checking and savings accounts, CSR initiatives etc. Customers can also login to the website to check for ATM locations.

OMAN AIR ADDS KATHMANDU TO NETWORKOman Air, the National Carrier of the Sultanate of Oman, announced the commencement of services between Muscat, the Omani capital and Kathmandu, from September. Kathmandu is the 40th destination in the Oman Air network and will be operated with a B737-700 aircraft offering business and economy class cabins.

communication necessities. Starting as a mobile company employing around 250 employees in March 2005, Nawras has now grown today

to become a full service provider with more than 800 Nawras staff committed to living the customer experience every day.

Nawras, a Qtel Group company, is celebrating the milestone achievement of serving more than two million mobile customers in the Sultanate of Oman. Since 2005 when this mobile company began, the Nawras family has steadily grown with more and more people choosing this award winning company to meet their communication needs.

With each successive Nawras success, the company has consistently kept its focus on its customers in order to deliver the products and services that are in line with their ever-changing

Nawras achieves two million mark

Wadi Al Jizzi Power Co launched a new website www.wajpco.com which has updated information about the company, its offerings, CSR and many other details. The new website provides a fresh interface, new points of interest and an intuitive navigation. Ali Abdullah al Abri, chairman of the

board of directors, said: “The new website is an inherent part of our plan in line with the directives of the government which stresses the need for concerted efforts of all departments to achieve the strategy aiming at promoting the electronic services and use of the portal.”

Wadi Al Jizzi Power Co launches website

Omran, the tourism-related investment, development and management company, started the formal handover of the site for the Asian Beach Games to the Muscat Asian Beach Games Organising Committee (MABGOC). The first building to be handed over is the Games Command

Centre, from which MABGOC will manage the event, in December 2010.

Keys to the Centre where given to Hilal bin Ali Al Sinani, deputy director general of operations, MABGOC, by Nasser Al Maqbali, VP Construction, Omran, in a

ceremony held at the site and attended by staff from Omran, MABGOC and other distinguished guests.

The ceremony marked the first stage in a phased programme, which will see the whole site handed over by November 2010.

Asian Beach Games site handover begins

18 September 2010

BankDhofar announced the appointment of Kamal Hassan Al Murazza, as deputy general manager – Wholesale Banking Group.

Within this role, Kamal is entrusted with the demanding tasks of managing, motivating and maximising team efforts to grow the bank’s wholesale business further.

Kamal has earned a Bachelor’s degree from the prestigious Saint Louis University Business School, US. He has also attended several specialised training programmes in the country as well as internationally. Kamal has over 11 years of experience in the banking sector in Oman and has had exposure in several important disciplines of banking.

WELCARE PARTICIPATES IN CANCER AWARENESS SEMINARWelcare Diagnostic and Treatment Center participated in a cancer awareness seminar for ladies in the capital. Dr Aseel Al Taee, Obstetrician and Gynecologist at Welcare DTC was the key speaker at the event which was well attended by young girls and middle aged ladies. This initiative is part of the clinic’s social responsibility and annual calendar of activities.

OMAN AIR ADDS GAIETY TO SALALAH FESTIVALWith increased flights from Oman Air to Salalah, more people are able to visit the verdant city and also to take part in the festivities of the Salalah Tourism Festival. Oman Air is the Diamond Sponsor and official carrier of the ongoing Salalah Tourism Festival, which is considered one of the premier events in the region. The Salalah Tourism Festival, which coincides with the annual monsoon season, is a big attraction for Western visitors. Tourists from Germany, UK, France and further afield come to Salalah during this period.

In a survey of the Most Valuable Companies in Oman done by Alam Aliktisaad Wala’mal (AIWA) and Gulf Baader Capital Markets (GBCM), BankMuscat has emerged on top. A detailed report of the survey has been published in the September issue of AIWA. The survey ranks the top 25 companies, listed on Muscat Securities Market, in the order of market capitalisation as at the end of July 2010. BankMuscat was followed by Omantel, BankDhofar, National Bank of Oman and Oman International Bank. The survey findings also presents the market capitalisation gainers and losers among these

BankMuscat tops AIWA-GBCM Most Valuable Companies Survey

TOP 5 MOST VALUABLE COMPANIES IN OMAN

S. No Companies Sector Closing (RO)

Market Cap - July 2010(In RO ‘000s)

1 Bank Muscat Banking 0.822 1,106,757

2 Oman Telecommunication Services - Telecom 1.187 890,250

3 Bank Dhofar Banking 0.701 570,296

4 National Bank of Oman Banking 0.331 357,811

5 Oman International Bank Banking 0.280 255,710

companies, on a year on year basis. Ahli Bank was the top gainer with an impressive growth of 55.2 per cent, followed by Oman Flour Mills, BankMuscat, BankDhofar and BankSohar. Seven companies’ market cap suffered from negative growth in double

digits. They included Salalah Port Services, Galfar, AES Barka, Raysut Cement, Dhofar Insurance, OIB and Omantel.

According to the survey report, for Oman, May 2010 was the worst month for equities after October 2008 debacle as it wiped out the entire gain accumulated during the first four months of the year. MSM 30 Index touched its 2010 low of 6,058.11 on June 30. The better than expected second quarter results lifted the market in July which saw a gain of 3.90%, however that was not sufficient to make up for the losses as MSM30 index ended with a loss of 1.17 per cent.

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20 September 2010

Nima Abu Wardeh, the presenter of BBC’s Middle East Business Report (MEBR), will be

anchoring the much-awaited OER Debate and Top 20 Awards to be held on October 25 at the Capital Market Authority (CMA).

The topic for OER Debate is “The Way Ahead – Road to Vision 2020”. Around 200 CEOs, entrepreneurs and decision makers from Oman’s corporate sector will be attending the event.

This year’s OER Debate will consist of four questions:

Are we out of the woods? 1. Is this the new normal?2. Are the government and the private 3. sector working at cross purposes?Is enough being done to achieve Vision 4. 2020?

The 2010 OER Debate and Top 20 Awards, which is into its second edition, follows the successful maiden debate held in May 2009. The first edition, which discussed the state of Oman’s economy in the midst of the global financial crisis, was well received by the audience as the participants in the debate, which included HE Maqbool bin Ali Sultan, Minister of Commerce and Industry, inspired confidence that the Sultanate’s financial fundamentals are on the right track.

NIMA ABU WARDEH TO ANCHOR OER DEBATEOER Debate and Top 20 Awards to be held on October 25, will see more than 200 business leaders debating about the way ahead for Oman’s economy

by think-tanks, the corporate world and government organisations for her insight. She is also invited to give talks as well as to participate in off-the-record discussions about the region. Wardeh provides consultancy and media training to government institutions and the private sector. She has written opinion pieces for Forbes Arabia and has taught media courses at Zayed University in the United Arab Emirates as a visiting lecturer.

Wardeh regularly chairs, and is a speaker at, regional and global gatherings, notably the World Economic Forum and the Arab Business Council meetings, as well

as other events and awards evenings.

She is keen to encourage talent and the region’s youth and has helped create competitions that serve this purpose, such as the Scintilla Monaco poetry competition. She has also judged numerous awards, competitions including Dubai’s mini film festival, and been an on-screen judge for Discovery’s Reel Race.

As a Young Arab Leader, she has received awards for excellence from regional businesses and communities. Wardeh won the first Oxford Alumni debate held in this region in June 2009.

OER EVENT

Wardeh, the moderator for the 2010 OER Debate and Top 20 Awards, is a bilingual English Arabic broadcast journalist specialising in Arab issues and presents the BBC World’s weekly business and finance programme, the MEBR and was part of the team that set up the programme. She has reported, produced and presented programmes for Al Jazeera and Dubai’s Business Channel as well as BBC World.Before joining MEBR, Nima was a regular guest on BBC Radio 4’s Four Corners addressing Arab issues, and a guest on BBC World’s Dateline London as a regional expert.

Wardeh is regarded as an opinion leader and in this capacity is approached

22 September 2010

PERISCOPE

What next for the India Fund?Rise in savings and massive infrastructure spending will reduce India’s dependence on exports and keep its economy robust

BY MATEIN KHALID

While the Western e c o n o m i e s contracted in 2009, India

emerged from the global credit crunch with minimal damage to its financial system, though the Sensex plunged 12000 points and ICICI Bank needed an RBI lifeboat once the offshore money markets blackballed its banking subsidiaries in Canada and Britain. While Indian GDP growth rates and industrial production fell, the deceleration was

both relatively modest and temporary. Unlike China, the ruling Congress Party did not face the loss of 40 million factory jobs and social unrest once export markets in the US and Europe collapsed. Nor was India forced to resort to a state-sanctioned trillion dollar bank lending spree, as happened in China.

However, the RBI eased interest rates by 450 points and New Delhi expanded fiscal policies. The chickens

The author is a renowned investment

banker based in Dubai

have now come home to roost as wholesale inflation has spiked above 10 per cent after the government slashed fuel subsidies, the reason the RBI has been forced to increase the repo rate at successive monetary conclaves.

ROBUST ECONOMYIndia is among the most resilient economies in Asia because it is dominated by consumption and services, not exports to the West and capex. However, exports are 24 per cent of the Indian economy and Europe is the country’s largest trading partner. This means Indian industrial production will remain hostage to the global business cycle. However, the secular rise in Indian savings to 36 per cent and Dr Manmohan Singh’s $400bn infrastructure spending will reduce Indian dependence on exports to the EU, its largest export market.

This is the reason the post-crisis performance of the Indian economy is so robust, with GDP growth rates near 9 per cent, an economic surge that has reignited inflation and forced the RBI to tighten credit. With high world food and crude oil prices, more RBI tightening is inevitable. Apart from 3G or asset sales windfalls, the budget will not

Al-Khuwair: 24601569, Muscat City Centre: 24558063, Sohar (near Globe Roundabout): 95119692/95119687 UAE • Saudi Arabia • Kuwait • Bahrain • Qatar • Jordan • Egypt • India www.homecentre.net

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is usually taken.in the house

THE BEST SEAT

BECKY CHAISE

24 September 2010

PERISCOPE

INDIA IS AMONG THE MOST RESILIENT ECONOMIES IN ASIA BECAUSE IT IS DOMINATED BY CONSUMPTION AND SERVICES. HOWEVER, EXPORTS ARE 24 PER CENT OF ITS ECONOMY. THIS MEANS INDIAN INDUSTRIAL PRODUCTION WILL REMAIN HOSTAGE TO GLOBAL BUSINESS CYCLES

reverse the widening fiscal deficit trend bequeathed by the crisis.

HUGE VALUATION PREMIUMThe Sensex rose a spectacular 80 per cent as financial markets realised that India had dodged the post-Lehman recession bullet spawned in Wall Street, the City of London and Zurich. Dalal Street is a magnet for global investors as risk appetites surged, sovereign credit default fears vanished and India’s economic and earnings growth surged. Indian GDP growth in the next three years will be almost triple the anaemic growth in the US and Europe. This is the reason India trades at a huge valuation premium to Western markets or even the major emerging markets at 16 times forward earnings.

However, I believe that a 36 per cent valuation premium to emerging markets is excessive at a time when the RBI will hike interest rates, while inflation, high oil prices and borrowing costs dampen both consumer spending and industrial output. The reason Sensex traded at 18000 was only because the mood swings of global investors veered from fear to greed, with the Chicago Volatility

Index falling from 40 to 22. The Indian economy may be somewhat immune to global shocks but Dalal Street is still hostage to global liquidity flows. Just because India’s GDP growth is not entirely export dependent does not mean that the Sensex is not vulnerable to a global investor loss of confidence.

SAFE TO TRADEAt 18,000, the Sensex is overbought as it prices at least 25 per cent earning’s growth at a time when the central bank is determined to lean against the wind and tighten interest rates. Once the crude oil prices rise above $80, it is entirely possible that Indian earnings growth projections

are far too bullish. This is particularly so as the UK and Eurozone economies are most vulnerable to a double dip recession.

India is a secular global growth story and will trade at a premium valuation even after a correction. However, I do not think the Sensex will revisit the all time high at 21,077 on January 2008. Nor will it fall to its 8,160 low in March 2009 when foreign money fled Dalal Street. A 15,000 – 20,000 range is a far more likely and safe trading range to own the India Fund (IFN) listed on the New York Stock Exchange.

The India Fund (symbol IFN) rose from 13 in March 2009 to its current price in the 30-32 range. The India Fund, managed by Blackstone Asia Advisors, has a heavy weighting in Reliance Industries, Infosys, HDFC, ICICI Bank and TCS. These shares alone constitute one third of the India Fund. IT, finance and petrochemicals are all high beta, cyclical industries. Therefore, I can easily envisage the India Fund (IFN) falling to 24-25 if Sensex corrects down to 15,000. The India Fund will offer value at 24-25 for a 35-37 target in the next 12 months.

IFN AT A GLANCEListed on the New York Stock Exchange

Managed by Blackstone Asia Advisors

Heavy weighting in Reliance Industries, Infosys, HDFC, ICICI Bank and TCS

Current price in 30-32 range

Expected to offer value at 24-25 for a 35-37 target in the next 12 months

FAVOURABLE FACTORSWhile Western economies contracted in 2009, India emerged from the global credit crunch with minimal damage

While Indian GDP growth rates and industrial production fell, the deceleration was both relatively modest and temporary

India is among the most resilient economies in Asia because it is dominated by consumption and services, not exports

Indian GDP growth in the next three years will be almost triple

PERISCOPE

For registration and group nomination offers for the above programs please contact:Phone: +968 24567154 • Mobile: +968 99437267Fax: +968 24567148 • E-mail: iimb@bahwancybertek.com

Bahwan CyberTek and Indian Institute of Management, Bangalore jointly announces the launch of Executive Education Open Programs to be delivered by program directors of Indian Institute of Management, Bangalore.

Executive Education Programs are designed to be the “Next Generation” programs focusing on the development of managers in their jobs and their organizations. They help enhance competence in critical thinking analysis, decision making and communication in global business environment. These Open programs are designed to improve effectiveness of

practicing managers and meet the management development needs of those who are preparing to achieve senior management positions. Participants of these programs get an opportunity to learn from the recent development and faculty research done on the particular topic. They also bene t immensely from networking in a congenial environment with peers from diverse industries and background.

The pedagogy adopted includes lectures, case studies supplemented by role-plays, group discussions and interactive classroom situations.

IIM-Bangalore Programs in Oman for the rst time

PROGRAM SCHEDULE

Program Title Area Target Audience Program Dates

Negotiation and Risk Management ofCommercial Contracts Finance & Control

Senior Executives handling contracts, projects, nance, planning, costing, materials, imports, exports, collaboration,R&D, marketing, expansion, diversi cation etc.

18, 19 and 20 October 2010

Embedding Leadership Excellence Leadership Senior Managers looking for enhancing their leadership potential 8, 9 and 10 November 2010

Finance for Decision Making - for Non-Finance Managers Finance & Control Heads of divisions / functions, middle level managers who are

new to the concepts of nance 5, 6 and 7 December 2010

Business Analytics and Intelligence Operations & Quality Assurance

Senior, Middle level managers, project managers, QualityAssurance professionals, business analysts 19, 20, 21 and 22 December 2010

Creativity, Reinvention and Self Development for PracticingManagers

LeadershipSenior, Middle level Managers who are currently engaged in challenging responsibilities and aspiring to build their creativecapacities and self-transformation

20, 21 and 22 December 2010

Organizational Growth and StrategicHRM & Managing Talent Leadership CxOs, General Managers, Senior Managers and HR Heads 26, 27 and 28 December 2010

State of the Art Decision Modeling and Analysis

Leadership & Marketing

Managers who are actively involved in the decision makingprocess, consultants and analysts 10, 11 and 12 January 2011

We believe in building leaders through Holistic,

Transformative and Innovative Education

26 September 2010

COVER STORY

The global financial crisis presented CFOs in Oman with unprecedented challenges forcing them to use their skills and resources to navigate their

companies to safe shores. Mayank Singh reports

THE TRUEPERFORMERS

27September 2010

Chief Financial Officers (CFOs) today are like doctors who have just been through a prolonged medical emergency. Epidemics test the ability of

medical professionals and fundamentally challenge the conventional wisdom of the times. The financial crisis that engulfed the world for most of 2008 and 2009 placed CFOs in a similar situation.

Overnight, some of the most acclaimed financial strategies and innovations became a terrible mistake. Well thought-out acquisitions suddenly became over-ambitious forays. CFOs witnessed the unprecedented destruction of wealth and fought for wealthier times to come. Says Vishal Goenka, CFO, Renaissance Services, “The CFO also needs to create value by pulling together cross functional teams in the organisation to really think about how to drive productivity and efficiency, how we can allocate resources and where we can find more value in the business.”

Cash, costs, communication, confidence.

Those four Cs sum up the mandate of the CFO in a year (2008-09) when everything that could go wrong – and also things that many thought would never go wrong – went spectacularly awry. And it was for the CFO to step into the breach like never before. “The finance function is the glue that binds an organisation together,” says Phil Beale, CFO, The Wave, Muscat. As demand and liquidity dried up, cash flows had to be expanded. As margins came under a squeeze, costs came under the microscope.

The CFO had to scrounge for capital in a world starved of that till-recently-taken-for-granted resource. Suddenly, the rules of the game had changed: Finance heads who once had little problems raising funds to make big-ticket acquisitions were now struggling to find capital to keep those assets afloat and squeeze growth out of them in recession-hit markets. Says Hafidh Al Harthy, CFO and secretary to the Board of Directors, Qalhat LNG “A lot of organisation’s ignored the very basics of business/risk management

and suffered severe consequences of the global financial crisis.”

That’s when the other two Cs moved up in priority in the CFO’s lexicon. Investors, vendors, customers and employers had to be first told about the realities in the market place and on the balance sheet; and then confidence instilled into them that this too would pass. Now CFOs aren’t particularly known for moving out of the comfort zone of the books they keep, but the credit crisis provided them that challenge or – as some finance heads would like to see it – the opportunity.

As liquidity conditions ease, demand picks up, and clients and consumers are more prone to spend, CFOs will doubtless breathe easier, but the smart ones among them won’t forget the lessons of frugality, restraint, and the need for balance that they picked up in the tough times.

In the following pages the best financial brains of Oman Inc recount how they faced the challenges thrown up by the global financial crisis.

COVERSTORY

28 September 2010

THE GREEN FUELMaqbool Yousuf Al Lawati,

Corporate Finance Manager, Oman LNG

is confident about the future prospects of

gas and sees the downturn as a

temporary phenomenon

29September 2010

Maqbool Yousuf Al Lawati, corporate finance manager, Oman LNG, says “The challenges faced by a

CFO depended on the industry that he was in. Our company and the oil and gas sector did not have such a large impact. On the employment side too we did not have any major challenge.” This is not to say that the company remained completely unscathed by the downturn. As the government’s cash flows got affected in the wake of the financial crisis, it was forced to revisit its development plans. This in turn affected the company as the government is Oman LNG’s biggest shareholder. The LNG major had to revisit its cash flow and see how this would impact the government’s receipts. “As oil prices plummeted from $140 per barrel to $30 per barrel it became imperative for us to look at our earnings and to give the government a forecast of our future cash flows,” says Maqbool. Oman LNG is the Sultanate’s second largest revenue generator and whenever something drastic happens, the company is called upon to help out.

The other big challenge was that the government was borrowing from local banks. As the crisis intensified international banks could not continue financing local banks. And as local banks had large commitments Oman LNG was asked if it could help boost the local liquidity situation. Says Maqbool, “We had a lot of cash and were able to shift money to local banks by moving our funds in local deposits and the feedback was quite positive.”

No worriesWhile other companies were grappling with cash flow problems, Oman LNG had no such issues. “Though our total cash flows were affected, the nature of our transactions and the solid customer base ensured that our finances were in a sound condition and we did not have problem in our receipts.”

Cost rationalisation is a continuous process at Oman LNG. The two large overheads for the company are employee

salary and the gas that it buys from the government. Though Maqbool and his team put in a little bit more effort in containing costs, this was not a big focus area. A bigger problem was managing employee expectations. During the boom years of 2007-08 there was a significant increase in the staff strength. A drastic decline posed a challenge in terms of maintaining staff levels and their morale. “We were able to meet the expectations of our employees with the help of our Board and management,”

says Maqbool. The company undertook a survey of various possibilities and scenarios. One of them being an analysis of the worst case scenario. “We looked at the pressures that the company could take if oil prices went down to $35 per barrel. This situation was unprecedented and we found that if this scenario persisted our financials would have been within acceptable limits and we would still make profits,” says Maqbool.

In the Oman LNG Board the finance function has always carried a lot of weightage and the CFO’s advice is taken seriously. During such unprecedented times, a focus on financial matters got a lot of support from all quarters.

The company could never imagine that oil prices would plummet from all time highs so rapidly. “Though we felt that $140 per barrel prices were unsustainable, people were talking about oil prices going to $200-$300 per barrel, but the sudden decline came as a shock.”

This sudden fall had a ripple effect as it impacted the real estate market and financial institutions.

Uncertain timesThe global scenario is still quite unstable as interest rates are fluctuating constantly. “The outlook on interest rates three to six months ago was quite different from today. On the demand side things are stabilising. Some South East Asian Economies are showing signs of positive growth but Japan has some issues and Europe and the US are still struggling.”

Companies which have borrowed money would like to have a clearer outlook on interest rates. But due to the crisis the normal rules relating to business and finance do not hold much ground. As past business cycles were completely different, the guidance in forecast has moved down international interest rates. In the first quarter of 2009 interest rate on deposits were anywhere between three to four per cent. Today it is around 1.25 per cent to one per cent.

Oman LNG distributes a significant part of its profits to its shareholders like the government, Shell and Total. The company keeps local securities ranging from three to six months, but has no long term cash. Oman and the Gulf countries were fortunate as their exposure to international financial cross currents were limited. Says Maqbool, “LNG as gas is the future as it is a clean fuel and is environment friendly. The prevailing prices of $70-80 per barrel is comfortable. While $140 per barrel was too much anything below $60 per barrel would be a concern. The current forecast for Oman LNG is pretty good.” Since its establishment in 1994, Oman LNG has progressed from a project under-construction to a world class company, liquefying natural gas in its plant at Qalhat in Oman and exporting it to international markets all over the world. Oman LNG harnesses cutting edge technology to provide the world with a purer source of energy, while contributing to the sustainable development of the Sultanate of Oman.

BRASS TACKS Oman LNG shifted money to local banks by moving our funds to local deposits

Employee salary and the gas that it buys from the government are its two large overheads

The global scenario is still quite unstable as interest rates are fluctuating constantly

COVERSTORY

30 September 2010

The global financial downturn was precipitated by the sub-prime mortgage crisis and as a consequence the global real estate sector faced the

financial tremors across continents. Says Phil Beale, CFO, The Wave, Muscat, “The global financial crisis created uncertainty in the minds of potential investors and the depth of the crisis was something that had never been seen before.” The lack of a legislative framework and appropriate response mechanisms globally to deal with such an eventuality made things worse. As the liquidity squeeze took hold, investors threw up their hands in despair as they did not know where their next installment was going to come from. “In Dubai, where I was working at the time, there were instances wherein customers walked away after paying deposits and installments totaling more than30 per cent of the contracted price.”

The Oman market had not increased to the same extent nor at the same rate as Dubai and other regions; this meant that the subsequent fall in prices was not as severe. The Wave had taken prudent measures in terms of its programme and financial resources and with the support of the shareholders and our bank (BankMuscat) the business had enough liquidity in place to come through the downturn. The backing of strong promoters like the Omani government, NIFCO and the Majid Al Futtaim Group (MAF) ensured stability. The response to the crisis for The Wave was implemented quickly and effectively due to the experience, prudence, and strong governance measures that were established in The Wave from inception.

Says Beale, “We did not make any new off plan sales in 2009; the focus was on helping existing customers to get credit wherever needed and to provide other advice and services where possible to assist them.” During 2010, The Wave has released 168 properties to date and has sold out nearly all of them. Initially in the wake of the crisis, some banks insisted on buyers paying up to 40 per cent of cash upfront for a loan, others withdrew temporarily from the market. “We talked to banks and introduced the bank to our customers. As a developer our role is not to plead with banks to support our customers and the project. Our role is to put the customer and the bank together, if needed, so that our customers can procure the loans they require.”

During 2009, we also helped our customers sell their properties if they chose to, though this was not always easy given the then prevailing market conditions. “People had to be patient as it was difficult to sell properties, at times it took upto six months to find a buyer,” says Beale. Other assistance was given to some of our customers who had acquired property just prior to the global financial crisis where possible to assist them in

being able to continue with the property ownership. Our customer service area worked with each individual customer who requested assistance.

Price cuts versus market positioningOman saw prices fall on an average of 20 per cent. “Unlike Dubai where prices were shaved by 40-50 per cent or more in the worst case, in Oman the price reductions overall were much smaller.”

The response by The Wave to the new market conditions saw the development of new product lines that maintained the integrity and quality of the development but targeted at specific pricing points to meet the market. With the property development experience available at The Wave new products were designed that “met the market” in terms of price without affecting the quality or style of the development. Effective market positioning is a more effective response than price cutting which erodes value in the long term for The Wave. The developer has assured existing buyers that the specifications of the new properties would be at the same standard as their’s. The Wave has a lot of development expertise which was used to understand the market and to come to a decision through senior management and the Board that has enabled The Wave to maintain its position.

Looking globally the role of the CFO did not change in a major way. The CFO came under more pressure as he had to micro manage aspects of the business and understand in more detail what was occurring. “If there was a cash flow problem then certain decisions had to be

BEING REALISTICWe stood by our buyers during the slowdown by helping them to procure loans

and giving them a payment holiday, says Phil Beale, CFO, The Wave Muscat

BAILING OUT The developer cut down prices on an average by 20 per cent

A payment holiday was given to existing customers in 2009

The project’s life cycle got extended by two to three years

31September 2010

Looking ahead Beale feels that things will be slow in the global real estate market for the next two years as there are concerns about a double dip recession. The position in Oman appears to be more positive and the economy strong so the market here is expected to continue.

Though things are improving in the US and Europe people have still not started hiring and unemployment levels in the US remain at historic highs. Says Beale, “Property is a long term asset and in difficult times people may prefer to rent rather than buy and so it may take longer for the sector to get back on its feet. This opens up opportunities for property investors if they have confidence in the markets.” China and India are growing at a fast pace but they are unlikely to have a big impact on the global economy as they are internalising i.e. their growth is being driven by infrastructure spending and domestic consumption. Oman too is following a similar approach. If a double dip scenario were to materialise it could extend project completion schedules further. On the other hand property prices have bottomed out so it may be a good time for serious buyers to look at the real estate market.

Beale feels that the size of the fall is something that the people will remember for a long time to come. The psychological impact will wane away and things will improve if inflation continues to remain low. Being cynical, two to three years after a crash people tend to forget about it and go back to their bad old ways. But for now people have definitely learnt about prudence and the ills of too much speculation. In certain things people are going back to core values like thrift and calibrated spending. How long this will last only time will tell. Despite the downturn the regional story is still intact. The GCC has a young population and is expected to reap a demographic dividend. Secondly, the region is looking beyond hydrocarbons and is investing in tourism. The geographic location of the Gulf means that it has potential to become a value add hub. All this augurs well for real estate developments like The Wave.

taken whether to defer or cut something for now to preserve capital and enterprise value, The CFO also had to look at ways of raising capital.” A crisis like this tests the system.” In good times while any gaps in the system may get glossed over in times of crisis such lacunae come to the fore. The CFO along with the CEO has to instill confidence in the team. “The finance function is the glue that binds an organisation together. The Dubai experience was one of constant meetings with contractors and others to instill confidence. The experience at The Wave was business as usual due to The Wave’s strong position.

Cost cutting The Wave reviewed all discretionary expenditure. For instance things such as software upgrades were put on hold, other expenses such as travel minimised and only essential expenditure made. The marketing staff was redeployed for reselling properties or for collecting payments. On the whole as The Wave ran a lean business, there were no retrenchments. The silver lining was that commodity prices came down, which eased the pressure on construction costs. Overall, as The Wave had a strong financial position it could ride over the problems without much pain.

32 September 2010

From the early days of his career Manohar Shenoy, Group CFO, W J Towell and Company has been a firm believer in the adage –- sales is vanity; profit

is sanity and cash is reality. Though this global crisis was not a depression, it came pretty close to it and the fundamental premise that stood out was that cash is king, perhaps even god!

Looking at the reasons for the crisis and its impact, Shenoy says, on a global basis there was a sudden shock with oil prices falling from $147 per barrel (dpb) in

July 2008 to $39dpd in January 2009. Anything that goes up so fast is bound to fall. There is usually a lead and lag effect in economic cycles. An economy is considered to be in a recession if there are two sequential quarters of negative growth. A sudden drop in oil prices, the collapse of real estate demand and the after effects of the US subprime crisis affected the Sultanate. Globally, the recession broke in Q4, 2007, but due to the lead and lag effect it came to Oman in Q3,2008.

Real estate prices peaked in Q2,2008,

but by the end of the year valuations had fallen from that peak by upto 15 per cent in some interiors and continued to fall till the end of 2009 . During this period, banks became wary about lending to real estate companies. Despite this, W J Towell came out unscatched due to a number of reasons. First of all, it is a conservative group and has stood rock steady across business cycles for the last 150 years. Secondly, the W J Towell parent company is not into buying and selling of property but follows a prudent build and lease model. Says Shenoy, “Leasing income is our real income. The

A STRONG LEGACY

Shrinking cash cycles may be good for

individual companies, but its large scale use may

hamper the chance of a quick economic recovery, says Manohar Shenoy,

Group CFO, W J Towell and Company

COVERSTORY

33September 2010

extended letters of credit (LCs) helping companies. Despite problems the group ended the year with good numbers. The erosion of real estate values impacted the ability of companies to borrow. This was compounded when banks simultaneously increased the security cover for their lending by upto 50 per cent in some cases. This increased the pressure as companies did not have additional collateral. Since W J Towell has a sufficient bank of freehold properties, it was able to keep its debt at the same levels, even borrow more for its property redevelopment programmes, particularly in MQ.

Shenoy feels that one needs to balance one’s short term and long term loans. “We have been conservative and have not used real estate as a tradable asset. And as they say real estate is the only real thing and everything else, other than cash, is “unreal”. As a number of its properties were initially developed in the 1970s, the group felt the need to redevelop them in accordance with new sensibilities. In the past, the land area that Muscat Municipality allowed to be developed was small, as a result of which the houses were fewer. As the population of Oman increased the concerned authorities allowed almost 50 per cent larger areas to be developed. In another related change, the Municipality also started allowing higher vertical construction. In MQ, for example, the new rules permitted ground plus three stories and in areas like Ghala ground plus nine stories. “Thus it made good sense for us to redevelop and build new properties. We relocated some of our tenants and rebuilt to capitalise on the new norms,” says Shenoy.

Though the plans for this redevelopment was drawn up before the crisis, the group did not have to go in for a major rescheduling of any of its projects as liquidity concerns never posed a problem.

The architects for the redevelopment are Towell Talati and close to 300 apartments, showrooms, offices and a few warehouses are under redevelopment.

Apart from real estate W J Towell also has a big distribution business, which also remained largely insulated from the slowdown. Says Shenoy, “We are in the FMCG business which is recession proof. We are not in branded perfumery or luxury items which get affected by a downturn. Our companies like Matrah Cold Stores and the Consumer Products Division supply to supermarkets and hypermarkets essential commodities.” Due to a big pipeline of captive and third-party projects, the group’s construction and engineering subsidiaries have seen robust improvements in their cash flows, as well as in their business performances.

During the crisis, the finance function became more centralised as W J Towell agreed with bankers that any discussion relating to finance had to be done at the group level rather than its subsidiaries. A centralised Investment Committee was drawn up to take decisions regarding any new investment, including any selective disinvestments of non-strategic assets. The group is well poised to benefit from MA opportunities as well as grow organically over the next decade.

The W J Towell Group believes in loyalty and commitment of its employees and the owners enjoy a lot of goodwill in the market with regard to its business practices which it has nurtured over the last nearly 150 years of its existence. “The recovery is going to be a U shaped one and will depend on how the West is faring as oil prices are correlated to the sentiment of the western world,” says Shenoy. He adds, the learning from the crisis is that whether the times are good or bad, it is important for us to have a pipeline of projects and orders across our businesses. Companies may shrink their cash cycle and tighten their belts as it is good for them, but if everyone does the same then it can have negative repercussions collectively for the economy, particularly as it is recovering from a slowdown.

value of property going up and down does not impact our cash flows as we have stable rental flows. The bulk of our residential and commercial properties are in Madinat as Sultan Qaboos (MQ), and since it is a prestigious location it has not been impacted to the same extent as other areas. In any case, it appears that property prices have bottomed and are slowly but surely seeing an uptick”

W J Towell Group is underpinned by the single obligor clause applicable to lending by Omani banks. No Omani bank is allowed to lend more than 15 per cent of its net worth to any group. Any stand-alone company in which the group mother company has more than 25 per cent or more shares is also considered to be a part of the group for lending purposes. “A group’s debt ceiling is defined by the Omani bank’s net worth, so if I have reached that limit then no group company is able to borrow more from that bank.” says Shenoy. The single obligor clause forced W J Towell to go to international banks (western and GCC based) for funding its organic growth requirements. Thanks to the easy money policy of the US Fed, dollar liquidity became a boon. LIBOR came down from 5.7 per cent in September 2007 to less than 1 per cent in early 2009 and only 0.3 per cent today. Overseas borrowing came in handy for W J Towell as the group could borrow from local banks only if the latter increased their net worth or if they had a share capital infusion. In 2008-09 a number of new banks like Qatar National Bank, Ahli Bank, Bank Sohar came up in Oman which along with banks like Habib Bank and Bank of Beirut also participated in the company’s funding and non-funding needs.

Shorter cyclesShenoy says, “In a downturn your working capital cycle has to shrink. It is a test when you have pressure on markets and your finished products.” In Oman, businesses were stuck with huge inventories as the demand was low and banks were not lending. As the malaise cut across a number of large business houses, banks could not afford to ask all of them to pay up. As a result banks

FINANCE ESSENTIALS Balance short and long term loans

In a downturn, working capital cycle needs to shrink

COVERSTORY

34 September 2010

35September 2010

In all emerging economies like Brazil, India, China, etc, the role of the CFO is becoming more prominent. His role is no longer limited to the traditional book

keeping function. Says Vishal Goenka, CFO, Renaissance Services, “Finance simply means fine sense. Thus, a CFO’s profile requires a person with extremely fine sense. As you think so you become. Think human, think business, think prudent. Success is all about consistency around the fundamentals. Life favours the devoted. Behind extraordinary achievement there is always an extra-ordinary effort.”

Renaissance has always been nimble and prepared for all seasons, companies can’t predict the future, but they can build organisations that will survive and flourish under just about any possible future. The group has a number of businesses out of which some are capital intensive while others are less capital intensive. “If you are stable you can move forward and keep investing in

your core businesses; thinking long term is difficult if your company’s survival is at stake. Our agile approach helped us to prepare for such a contingency and this approach is an integral part of the philosophy of the group. A CFO has to think prudently and to think business,” says Goenka. He further suggests that businesses need to get their breakeven point down so that, no matters what happens to the industry worldwide, they can be successful.

As a thumb rule, people like to do business with people whom they like and are comfortable with. When the crisis hit home, banks were forced to select a couple of companies whom they could continue to lend in a downturn due to liquidity and solvency concerns. Such a filtration process helped Renaissance as the innate confidence that banks had in the company’s business model saw the company raising capital without a hitch. In 2008-H1-2010, at peak of the crisis, Renaissance managed to invest around $500mn with full participation from local, regional and international banks. The company banks with over 25 banks across countries. Says Goenka, “Business is a relationship; people want to know that you are real, decent, kind and trustworthy. And when they sense that you are the real deal, they will open up to you. Before someone lends you a hand, you need to touch their heart.”

As a policy, the company tries not to be over reliant on a single source of funding. The fact that the company has

AN ORGANISATION’S INNER STRENGTH IS KEY TO ITS SUCCESSIn recession, most companies focus on cutting costs; however, history

has proven that winners made disproportionate investments in talent,

marketing, R&D and capital spending at exactly such times, says

Vishal Goenka, CFO, Renaissance Services

SIX FUNDAMENTALS OF BUSINESS

Planning for all seasons

Have the best team

Liquidity management

Optimising costs

Proactive M&A

Communicate right

COVERSTORY

36 September 2010

a presence in 16 countries, with different kind of projects, also necessitates a diverse funding base. Whenever the company enters a new market and project it makes an effort to match its liabilities and assets.

There were a number of people and leading companies who borrowed for the short term and then deployed these funds for long term investment. The temptation to do this arises as short term loans are cheaper than long term loans. For instance, a short term loan costs around four per cent while a long term loan may come at six per cent plus. “You need to match your asset profile to your loans and we have consciously tried to match our cash flows with our repayment needs. If you look at our projects whether they are vessels or PACs they generate sufficient cash flows to repay the matching liabilities in five to six years while our loans are generally more than that period,” says Goenka.

He feels that wherever you find problems it is because there is a mismatch between cash flows and liabilities, but after the global financial crisis most businesses have realised that they need to be more prudent and long term in their thinking.

The challengesRenaissance has had a pretty good run despite the crisis, though the company’s engineering business felt some short-term impact of recession, but the impact was marginal in the company’s marine services and contract businesses, which contribute to around 80 per cent of its turnover. The fact that oil prices have recovered from their lows and has been trading above $70 per barrel augurs well for the future for all companies in the oil and gas industry.

The company’s engineering business, which is among the top 25 EPC contractors in the Middle East, felt slight tremors as the ship repair and ship building business got affected and orders on the fabrication side were slow to come by. The silver lining was that the company had a good order backlog during the crisis period which helped it to tide over the crisis.

The fact that the engineering business is less capital intensive helped it to continue making money through the crisis and now the engineering business has started picking up as well. “If you look at our business model you see that 75 per cent of our revenue and cash flow are long term. Only 25 per cent of our revenues come from short term contracts. We have long term contracts in our PAC and in our vessels business, so our revenue model is secure; and our clientele includes reputed blue chip firms like BP, Shell, Total, PDO etc,” says Goenka.

In anticipation of the severity of the crisis, Renaissance did a stress test at all levels – the company assessed each revenue stream, put emphasis on collectability and investment in the long term rather than the short term. The company never went in for speculative gains and looked at each of its overheads to optimise costs. As a result of these it was able to make savings; in fact during the first quarter of 2010 there was an improvement in margins and profitability. “The stress test also included a stringent test on our billing pattern. We focused on good revenues during the crisis because it became really critical. In difficult times you need to be confident that your revenues are collectible,” says Goenka.

Inaction is the riskiest response to the uncertainties of an economic crisis, but rash or scattershot action can be nearly as damaging. Irrespective of the external environment, the company does a quarter-to-quarter cost optimisation assessment, a simple example; wherever possible, it reduces travelling expenses

by using video conferencing as a cost cutting device. Such meticulous planning and innovation helps the company to optimise savings.

Enhanced mandate The crisis also called upon CFOs to take on a bigger role in instilling confidence amongst employees. The company designed a communication strategy wherein it proactively shared the challenges to its employees, shareholders, bankers, clients, suppliers etc.

Looking back, Goenka says that what was happening in some of the markets gave us a feeling of anxiety, but no one knew that things would turn out to be so abysmally low. The sequence of failures in the US, Europe and then in our neighbouring countries created a lot of nervousness in the market, but things are more controllable now, in the last six months. There has been some thawing, visibility has improved, banks are opening up, people are more optimistic and the energy outlook is better.

The CFO plays two distinct but equally important roles. First, he must be a good strategic partner to line management. This part of the job usually involves financial structuring, inorganic opportunities and managing investors relations etc. He must also deal with external constituencies like consultants, bankers, analysts, investors, competitors etc. This role makes him the company’s ambassador to the outside world. The second part of his job is equally critical, that is the traditional policing role – the CFO as cop must be the guardian, the leader of good planning and performance management. Today business fundamentals and creditable accounting have become the new touchstone by which investors judge corporate quality.

The CFO also needs to create value by pulling together cross functional teams in the organisation to really think about how to drive productivity and efficiency, how we can allocate resources and where we can find more value in the business. He should work as a net exporter of talent to the rest of the group, says Goenka.

If you are stable you can move forward and keep investing in your core businesses, thinking long term is difficult if your company’s survival is at stake

COVERSTORY

40 September 2010

Hafidh Al-Harthy, finance manager and secretary to the Board of Directors, Qalhat LNG (QLNG) is a firm believer in following

fundamentals. “A lot of organisations ignored the very basics of business/risk management and suffered severe consequences of the global financial crisis,” he says. These basics being – not putting all your eggs in one basket; high returns equal high risks so it is important to know your risks and to be prepared for the consequences; take calculated risks to succeed and finally cash is king and in a difficult year like 2008 cash was akin to God. A business can be very successful in generating good returns but if cash is not properly managed its creditors can shut it down.

Steady growth Says Hafidh, “QLNG has never ventured into the unknown, but we picked everything on our way that wets our risk appetite to generate additional value for our business; of course this did not come without risks as we always believed that nothing ventured is nothing gained.” QLNG is highly geared with 90 per cent of its funds being financed by a syndicate of local, regional and international banks. But this has been done at very attractive terms and significantly low pricing. The project was completed in 2005 and it started operations at the beginning of 2006. It is counted as a landmark not only within Oman or the region but also at an international level.

The success story started right from the beginning and it went onto achieve significant milestones on its way like:

The project was completed before time and well below budget in line with global benchmarks. This did away with the need for additional cash flow for cost overruns. On the contrary, the company drew a lot less cash from the loan facilities than the commitment that it had signed with the banks.

As a consequence, QLNG was able to go back to its lenders and renegotiate the pricing structure of its loans and it

BACK TO BASICSHafidh Al-Harthy, Finance Manager, Qalhat

LNG had an enviable problem at hand during the

crisis – managing surplus cash judiciously

FAST TRACKThe loan facility that was signed with the banks is repayable over 14 years but in the very first year of repayment in 2007 the company prepaid almost 26 per cent of its total loan

In 2008 when the whole world was suffering from cash flow problem QLNG surprised its lenders with another prepayment of 11 per cent

The company now does not have to make any scheduled loan repayments until the year 2013

successfully managed to lower interest rates substantially. At today’s money market rates, this is almost zilch.

In addition to lower draw downs from the loan, the project started to generate more cash than initially projected, an early start-up translated into production before the due date. As a result more cash was generated than what was needed for the business which helped the company to pay 100 per cent of distributable profits to its shareholders as dividends.

The loan facility that was signed with the banks is repayable over 14 years but in the very first year of repayment (2007) the company prepaid (accelerated repayment) almost 26 per cent ($140mn) of its total loan. In 2008, when the whole world was suffering from cash flow problems, it went ahead and surprised its lenders with another prepayment of 11 per cent (or $60mn), which meant that more than a third of the loan was repaid in the very first two years of the 14 years loan tenor, and the company now does not have to make any scheduled loan repayments until 2013.

To achieve 90 per cent gearing the project needed to have sufficient long term sales agreement in place to make the project bankable, and this is what QLNG did, as it sold almost 90 per cent of its long term capacity. Says Hafidh, “We could have easily clasped our hands and continued fulfilling our committed sales agreement and got what was forecasted in the economic

41September 2010

model that was used during the Final Investment Decision (FID). However, we did not sit on our laurels but applied ourselves to reviewing every opportunity that could arbitrage those long term deals (without additional production) and generate more value with minimal additional risks.” Hence QLNG ventured into re-trading its already sold volumes to higher paying markets and procured resupplies for its long term commitments. This generated a significant upside not only for our bottomline but this was shared with our long term buyers, the government as feed stock supplier and with the shareholders.

The company, as is customary in the oil and gas industry of Oman, took a right decision at the beginning of operations to set aside one per cent of its net income for Social Security Funding, hence the additional revenue generated from the arbitrage activities also contributed to community funding. “What we have achieved as a responsible corporate citizen in this area is beyond imagination and speaks for itself,” says Hafidh.

As energy prices were going through the roof in 2008, QLNG approached its long term buyers to review the already agreed pricing formulae. This was

also done to support the government in increasing its revenue. As a result the company achieved substantial improvement in its pricing formulae for its long term sales, almost all of this is being passed to the government as an increase in feed stock prices.

QLNG has constructed its own state- of-the-art building in Airport heights where it has moved in recently. Financing of this project was also done from internally generated funds.

Says Hafidh, “In spite of meeting all our payment obligations including accelerating loan repayments, meeting our dividend expectations, financing our new office building, we still are building up significant surplus cash. So our problem is not lack of cash but what to do with the surplus cash.” So far the company had been investing its surpluses in fixed deposits with banks internationally but over the last few years it has over weighted its local deposits slightly to support local banks, the economy and the local markets liquidity. As a matter of policy QLNG never ventured into stocks and bonds and thus escaped the adverse consequences faced by organisations which had such exposure. In an effort to deploy its cash surplus, the company once again convinced its Board and shareholders to take private equity in projects related to the energy sector. “The projects in the energy sector tend to be stable and it is an industry that we understand best.”

As a start, QLNG has taken a 10 per cent equity in a power plant in Japan. The LNG major has been a trendsetter of sorts as it was the first foreign investor ever to enter the Japanese energy sector. Moreover, although the investment was effective from December 2008 it has already received significant dividend returns from this investment. Says Hafidh, “we are looking for more opportunities in this sector whether locally in Oman, regionally or internationally in projects where risks are low with moderate returns, and we welcome anyone who may be interested in having us as their partners. Cash is not issue if the proposal can wet our appetite.” That is a proposition that few are going to resist.

COVERSTORY

42 September 2010

Though times may be difficult but people continue to talk and this has proved to be a comforting factor for Nawras during the global downturn.

Says Jorgen Latte, CFO, Nawras, “We were fortunately not affected by the recent global financial crisis continually growing successfully despite the economic slowdown in other parts of the world. Funding for our ongoing ventures was possible due to the excellent relations that we had with our banks.”

The telecom major has consistently shown a strong performance clocking impressive financial results with increasing numbers of customers choosing its pleasingly different services to meet their evolving communication needs. In keeping with good business practices the company has always kept a close eye on expenses. Nawras kept a close eye on costs including all purchase decisions in even greater detail, as news of the world economic slump became known.

Says Latte, “The role of a CFO is always a multi-faceted one and as a member of the executive team at Nawras I do take a keen interest in all areas of the business. Company decisions are made after considering the marketing, financial, commercial and technical aspects of our business. Communicating clearly with my team and the rest of the Nawras family is important and I am always open to ideas and suggestions that can contribute positively to improve our performance further. The open plan style of seating

TIGHT FISTEDGood financial management is

important irrespective of the

economic environment, says

Jorgen Latte, CFO, Nawras

FOCUSSED APPROACHNawras kept a close eye on costs including all purchase decisions in even greater detail, as news of the world economic slump became known

The open plan style of seating favoured by Nawras is conducive to a frank and frequent exchange of information

Good financial management is always important and one should not wait for a crisis situation to get your house in order

favoured by Nawras is conducive to a frank and frequent exchange of information.”

Business cycle While no one had an inkling of the latest financial crisis before it hit the world stage Latte feels that one always needs to be prepared for declines or dips in business conditions. “I would always be looking for prudent business practices to be practiced even when the economy is booming and times are good.”

The good news is that Oman was largely unaffected by the global financial woes, there was little need of recovery and economic signs are looking good. As an Omani company, Nawras has continued to grow its business, recently becoming a full service provider and a one-stop shop for business and residential customers in Oman be it mobile or fixed, broadband or voice. Latte signs off, “Good financial management is always important and you should not wait for a crisis situation to get your house in order.”

COVERSTORY

44 September 2010

Zubair Automotive rewrote the rules of the book during the global financial crisis by launching one of the biggest discount offers as a

dealership. Says C S Badrinath, CFO, The Zubair Corporation, “We are working in an uncertain environment. This is a part of the business cycle that happens every five to six years. Moreover, since this downturn came on the back of strong growth witnessed in 2007-2008 the delta effect was much more sharp. It was sudden and more severe than before. The second challenge was that there was a lot of uncertainty, and this was more of a financial crisis rather than a business crisis. The environment in which banks operated became difficult and as they came under pressure they clamped upon others raising liquidity concerns. Banks started to reduce credit lines.”

Lending support The silver lining was that despite their concerns, banks continued to support businesses in the Sultanate and principals like Mitsubishi, Dodge, Audi etc stood by their distributors. The latter stemmed from the fact that though principals had their own set of problems to grapple with, they realised that the Middle East was one area that was providing them with some opportunity and they had to support the region in a better way. The fact that distributors were left holding large inventories also made it imperative to back the Middle East dealers. Realising the gravity of the situation, principals started giving credit extensions.

DEVIL AND THE DEEP SEAThe cycle of the automobile business, large inventories and an

uncertain environment made some tough decisions imperative,

says C S Badrinath, CFO, The Zubair Corporation

COVERSTORY

46 September 2010

In the automotive sector there was a sharp rise in business during 2006-08 which was immediately followed by a steep fall. The demand was going down and psychologically customers were shaken. There was a knock on effect as funding lines got squeezed and purchase decisions were postponed. The automobile business has its own set of constraints that aggravated matters. The business has a long forecasting and delivery schedule. “Due to a stretched lead time if you place an order at the time of manufacture and demand slows down, then one is left holding large inventories,” says Badrinath.

Faced with this predicament, the group decided to go in for aggressive marketing to liquidate its stocks. “In 2008 our carrying cost was high, the choice was to hold onto our inventory for a longer period of time and to endure the pain, make our principals unhappy or to endure short term pain and then to refocus.”

While some models have a natural pull for customers, others needed a certain amount of push in the shape of discounts, incentives etc. Says Badrinath, “We were the first ones to take an aggressive stance by going in for push driven marketing. The market reacted positively to the move and we came out stronger.” The discounting has raised customer expectations but once things are back to normal they would need to adjust themselves to the new reality.

Fleeting impact Apart from the automobile business the group was not impacted similarly in its other lines of business. The hospitality business saw a marginal knockout effect, but in the oil and gas sector it was business as usual.

The pressure started mounting in the last quarter of 2008 after the collapse of Lehman Brothers in September 2008. In a globalised market the aftermath of the collapse of institutions like Bear Stearns, Fannie Mae and so on had an impact on the banking scenario. Banks became wary of lending not knowing where the next default is going to come from.

Says Badrinath, “The main job of banks is to lend, and despite the problems local banks did support the local companies during Q’4, 2008 and Q’1 and Q’2 of 2009. Being a big conglomerate The Zubair Group has relations with regional and international banks. This in turn affected credit lines as these banks had liquidity issues.” There is a subtle difference between banking with local and international banks. With local banks there is a relationship based approach as they are stakeholders in operations, but with international banks the relationship in more impersonal.

Business planning Talking about planning Badrinath says, the planning scenario is determined by market conditions as business is a cycle in which things move up and down. As and when the business goes down, staff strength gets rationalised accordingly. The CFO has an HR role as he has to do a lot of communication. Looking at costs is a natural part of a CFO’s role, “We look at the MIS on a monthly basis in management committee meetings. We have a working capital cycle and the effort is to ease the pressure on the cycle, this is done through debate and discussions.

It is a continuous process and we continued the process during the downturn.” The group uses forecasting tools to gauge future demand, but it is difficult to place a finger on demand exactly in the short run.

As a part of the corporate structure people are made aware of the prevalent situation and they are a part of the joint efforts to work on the situation. “As a CFO we do wave the red flag whenever the need is felt for it. In the past also we have had downturns but since this drop took place after two years of robust growth, the impact felt was much sterner. The speed and frequency of collapse of some global players was a huge shock and the psychological impact created by such events made sure that people who would otherwise change cars every three to five years postponed their decision.”

Badrinath is not sure whether people will be more intelligent to avoid a crisis next time around. “The Middle East region is a different market compared to other parts of the world as countries in the region are closed and inward looking. Second, compared to international cross currents more weightage is given to local factors like development contracts, government spending etc.” With the oil outlook looking positive, the airport project and other developments in Duqm, he is confident that the positive effects will rub off on business. The local liquidity has gone up and corporates have come to a subnormal capital cycle, with the situation becoming more comfortable.

Getting decisions right in a crisis period becomes that much more imperative. It becomes important to motivate the staff, work together as a team and to win over adverse circumstances to come out successful. The CFO’s role should be to avoid knee-jerk reactions to economic swings. It all goes down to getting the basics right – “The problems started because someone wanted to gear their organisation 40 times. As long as you follow the standard norms things are unlikely to go awry.”

CHOOSING THE LESSER EVIL Since this downturn came on the back of strong growth witnessed in 2007-2008 the delta effect was much more sharp

In 2008 our carrying cost was high, the choice was to hold onto our inventory for a longer period of time and to endure the pain, make our principals unhappy or to endure short term pain and then to refocus

Due to a stretched lead time if you place an order at the time of manufacture and demand slows down, then one is left holding large inventories

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COVERSTORY

50 September 2010

Omran is the government of Oman’s tourism development and invest-ment arm. It was established in 2005 with

a mandate to develop the infrastructure and facilities required to expand the country’s existing tourism industry to support the Sultanate’s plan to develop tourism as a major national industry

by 2020. Strangely, Omran has lived a double life through the crisis. Being a government organisation, it has had no liquidity concerns of its own thanks to its strong equity and asset base, but in some of its joint ventures it has faced issues.

Omran is developing the Oman Convention and Exhibition Centre; the Asian Beach Games complex; Fort Hotel;

Muscat City Hotels; Duqum Beach Hotel; Khasab Hotel, and the Jabal Akhdar Hotel on its own. In addition to these it has entered into many joint ventures with various other partners to develop ITC’s, resorts and hotels. For example, Yiti project is being done in partnership with Sama Dubai; Ras Al Hadd Resort is a joint venture with the Qatari Diar Real Estate Investment Company; Saraya Bandar

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COVERSTORY

52 September 2010

Jissah is being developed with Saraya and Muriya Tourism Development a joint venture between Omran and Orascom Hotels and Development is developing Jebel Sifah and Salalah Beach, Al Sadah Island. Omran owns 4 operational hotels InterContinental Muscat, Swiss Belhotel Masirah, Golden Tulip Khasab and Diba and also asset manage and supervise Al Bustan Hotel and Oman Dive Center on behalf of Government. All Omran projects are running on time and are at various stages. Asian Beach Games is going ahead as per the schedule and will be delivered on time.

Making a differenceSays Prakash Gabra, CFO, Omran, “The government is keen on not delaying any project.” Keeping this goal in mind the company has initiated a slew of measures to mitigate problems. We are building 12 hotels in Oman and have got financing for all of them and most of these projects are funded by 100 per cent equity.

After banks started showing reluctance for financing real estate projects, Omran and our joint venture partners differentiated its real estate and tourism components of the projects. Thus bank funding for hotel projects in Jebel Sifah and Salalah Beach were secured easily. “Hotels have an internal rate of return (IRR) of 8 to 15 per cent and are seen as a secure option by banks for funding.

In another big move, Omran infused its share of cash immediately in all its joint ventures whenever our partners brought in their share of equity holding. Says Gabra, “We put up cash in line with our shareholding and our joint venture partners were able to bring to the table their commitment.” This move has ensured funding for most of Omran’s joint ventures. In cases where the joint venture partner has been impacted in a big way, the government is looking at taking over projects completely.

Gabra admits that despite such measures the speed of projects has slowed down not because of cash shortages but due to other problems like a slowdown in real estate sales. “Given the situation we have

little choice but to adopt a wait and watch strategy. So while values and prices have gone down, so have construction costs.” As construction costs have fallen by 30-40 per cent, Omran is hopeful that its joint venture partners will quicken the pace of their projects, giving a jumpstart to the market.

Enviable stateOmran has had a problem of plenty on its hand. Due to its frenzied growth in the last two years the company has been finding it difficult to find talent for its needs. The strength of the organisation has gone up from 20 to 86 between 2008-2010. This has meant creating space for new recruits forcing the company to shift from its old office premises to a new building in Al Khywer. To cut costs it has reduced entitlements like travelling allowances etc.

Gabra who was the first employee to be

recruited at Omran has always been an important figure in the company. Looking ahead he is unsure about the time that it is going to take for the real estate market to pick up. “It depends on Dubai and the rebound in the regional markets. The prices of real estate properties though have stabilised.”

In the initial phase Ministry of Tourism was targeting European tourists, but with Europe being impacted by the sub-prime crisis and the global liquidity situation, the focus has now shifted to attracting Asian and GCC buyers also. Recently an official represetative for Oman tourism office has been appointed for the Indian market as well. Oman as a destination is being promoted in Malaysia, Thailand and other South East Asian countries. Oman Air is backing these efforts by starting flight connectivity to these places.”

Though demand for properties from the GCC and Europe dried up, Oman was able to withstand the impact because of the limited size of the ITC market. Says Gabra, “If we put together all ITC’s being developed in Oman they add up to 20,000 residential units. So whenever the market picks up these properties will sell without much trouble.”

The real estate market has kept people guessing and Gabra is not ready to place his bets on the market in the short term. “It is difficult to hazard a guess as to when the market would recover fully. We were hopeful that 2010 would see a robust recovery, but that has not materialised, to be on the safer side I would say that things should get better by 2011,” says Gabra.

Despite such a scenario, Oman has not seen much of an impact as almost all projects are going ahead without a hitch. Construction, infrastructure and roadwork’s are proceeding apace. Spending investment has gone up. My personal learning’s from the crisis have been two-fold “One sell with targeted profits during the boom time and be patient during recession,” he concludes.

OMRAN – PROJECTS Oman Convention and Exhibition Centre

Asian Beach Games

Fort Hotel

Muscat City Hotel

Duqum Beach Hotel

Jabal Akhdar Hotel

JOINT VENTURESSalam Yiti project in partnership with Sama Dubai

Ras Al Hadd Resort with the Qatari Diar Real Estate Investment Company

Saraya Bandar Jissah is being developed with Saraya

Muriya Tourism Development a joint venture between Omran and Orascom Hotels Development is developing Jebel Sifah and Salalah Beach

COVERSTORY

54 September 2010

Says Venugopal Venkatesh, CFO, Oman Oil Company, “Being a project development company we are uniquely placed as we invest our

surplus in projects. Fortunately we have not invested in any major projects in the last two years. Conversely, the crisis has given us a lot of opportunities to pick up assets as valuations are cheap.” Oman Oil bought a good stake in a company in Eastern Europe, when the market was down by around 50 per cent. The share price of the company has since recovered and is trading at 75 per cent of its peak value. “We are on the look-out for more opportunities. The share price on the market is not a price for bulk trade but for small trade and whether the kind of stake that we are looking for is available is an important concern. We also need to analyse the targets that we are looking at and what premiums we can earn.”

Good tidingsVenkatesh feels that the worst is over and that the world has recovered from its lows. India and China are driving this recovery but people should avoid over heated markets because if something goes wrong then everything will collapse.

A GOOD DEALWe turned the crisis into

an opportunity by taking

stakes in reasonably

priced companies, says

Venugopal Venkatesh,

CFO, Oman Oil Company

REALITY CHECKMany CFOs were driven by a herd mentality

People learnt that they needed to have more equity in their company

The two years of extraordinary growth were an aberration rather than a rule

Oman Oil is owned by the Ministry of Finance and therefore it has never faced a cash constraint. But despite this the company keeps a keen eye on its overheads. Says Venkatesh, “We do not have any fat. We have a plan and every manpower addition is carefully thought through.” In the last two years the company’s strength has gone up from 55 to 75. Venkatesh narrates an example, “I need two senior accountants, but I have hired only one and have been managing things with him for the last seven

months. Everytime we get a request for manpower upgrades, we ask – if there is enough pressure on the person. If not, then he may be underutilised. Being an investment company Oman Oil outsources its advisory work.”

Many of the CFOs are driven by a herd mentality. If they see others doing something they feel that there is money on the table that they are foregoing. A big learning from 2008-09 is the fact that people learnt that they needed to have more equity in their company. Earlier if they were using 70-80 per cent leverage, now they learnt that they needed to have at least 40 per cent equity.

“In the last ten years we saw two years of extraordinary growth, and that is a blip or an aberration rather than a rule. People need to get used to this new normal treating the 2006-08 period a euphoria. One cannot expect a huge bonus every year,” says Venkatesh.

56 September 2010

PERSONALITY

When acclaimed French make-up artist Fred Farrugia decided to go solo and launch his own makeup line,

he was not afraid to break classic makeup fundamentals by designing totally personal

and adaptable make-up. The result: The Swiss army knife of make-up, boasting of a very contemporary, practical, pretty and simple packaging all in one. The designs, sold in white plastic containers, include eye shadows, foundations, blush, lipstick and concealer. The year was 2005

and Farrugia’s make-up line went on to become world-renowned.

The notable part of this success story is that Eric Kerboriou, the marketing director of Nawras, had been the business consultant for Farrugia when the latter

LIVE THE PRESENT MOMENTEric Kerboriou,

Marketing Director, Nawras

live a diverse and colourful

life both personally and

professionally, reports

Visvas Paul D Karra

57September 2010

decided to go solo. Before anyone’s eyes begin to open wide in amazement, let it be also known that the multifarious skills of Kerboriou also led him to work for French automotive giant Renault before he got into the telecom sector.

Living the brandHaving seen and worked in industries as diverse as chalk and cheese, Kerboriou, however, draws a parallel between the telecom sector and the wellness and beauty industry. Both are about brand life and passion. Both need extensive media publicity to hold the brand and both need people who are passionate about their brands. Holding Nawras CEO Ross Cormack in high esteem, Kerboriou opines that Cormack lives and breathes Nawras just like Farrugia who is passionate about his brand.

The key elements to the success of a brand are the right positioning, the harmony of the logo with the visuals along with good financing and marketing. These coupled with good publicity build a brand and ensure that it stays on top for a long time.

Kerboriou, with a Franco-Italian parental lineage, lived his life all over the world. He obtained a masters degree in economics from the University Paris IX Dauphine and worked with Renault in France where he developed a strong financial and commercial background. He did his MBA at the Business School of HEC Paris and finished it at Wharton School, in Philadelphia, US. The 42-year-old Kerboriou says that more than 25 years of his life have been spent outside of France, much of which was in the so-called Black African countries like Nigeria, Senegal etc.

Telecom stintKerboriou worked with American startup FusionOne and French startup Bouygues Telecom in the period between 2003 and 2006. During his time with the latter, his responsibilities included sales, marketing, communication, e-commerce, advertising and business development with the creation of two subsidiaries Mobile Direct and Bouygues Telecom Caraibes. The period in telecom startups and companies took him to the Caribbean as well as the Black African countries.

Many companies, including telcos, which flourished during the dotcom boom later went bust as they had difficulties in managing cash, due to which overseas operations of many US telcos had to be shut down. When this began to happen, Kerboriou moved away from the telcos and went into the consulting business. It was during this time that he was the consultant for launching the famed Fred Farrugia make-up line.

From 2006 to 2009, Kerboriou worked with Tunisiana telecommunications company, a 50-50 subsidiary of Qatar’s Qtel and Egypt’s Orascom. While there, he participated in the development of the

company’s marketshare and profitability also contributing to its market leading position in Tunisia. Kerboriou joined Nawras in 2009 to further strengthen the Nawras brand and lead the team focusing on the company’s pleasingly different marketing objectives.

Talking about his experience in such diverse markets, Kerboriou says that it is a difficult process to build a brand but it is easy to kill it. Moreover, talking about living the customer’s experience is an easy thing to say but difficult to apply. In this regard, he is full of appreciation for all of the Nawras staff who is able to carry the brand so well.

Sure-fire projectsKerboriou has an enviable educational background in finance and marketing. This heady combination gives him an edge while proposing new projects for his company. With number crunching coming easily to him, whenever he proposes a new marketing strategy for Nawras, there is a higher chance that it will be accepted quickly because the management is aware that Kerboriou would have worked out the financials as well. In this way, he has been able to get approval for more than 100 projects in the last one and a half year he has been with Nawras. Some of these projects are not visible to the public but most of them have been instrumental in increasing the goodwill of the brand.

By the end of 2009, Nawras had achieved 47 per cent market share and received the ‘Brand Leadership’ award at the global awards for brand excellence as well as ‘Customer Service Provider of the Year’ from CommsMEA and Middle East Call Centre of the Year from Insights. Towards the end of 2009 itself, Nawras gained the Superbrand status.

Kerboriou’s mantra of success consists of two elements: Good interpersonal skills and creativity which includes a vision along with analytical and financial skills. These will help you to understand the job better and help you to bridge any gap and enable the company to grow translating into better margins and cash flows.

Sportive lifeIf the professional life of Kerboriou is remarkable, then his passions in life are impressive as well. This father of two children, at age 42, has mastered two martial arts – karate and kung fu. Actually, he is learning a third one, Brazilian jujitsu, thanks to sensei Steve Deltoro, former MMA (Mixed Martial Art) competition fighter, whom he met in Muscat. Besides this, he is a great lover of outdoor sports activities like sailing, water skiing, tennis etc. He does not just love these sports, but also teaches some of them.

As a tennis coach, he coached European wheelchair tennis champion Frenchman Laurent Giammartini for three years.

If you want to attain your goals, you should announce them to your friends and family as this will make you to remain committed

58 September 2010

Giammartini was the European wheelchair champion for 10 years and won a medal at the 1992 Barcelona Paralympics where wheelchair tennis was introduced for the first time as a full medal sport.

Kerboriou also has great affinity for water sports like sailing and water skiing. He was the Senegalese sailing champion in two categories – the optimist and wind surfing, and was involved in the sport as an instructor. Here in Oman, jet skiing is amongst his favourite activities. He has many friends in Muscat who love the exhilarating rides and he has bought two jet skis for himself – magnificent beasts as he calls them. At other times, he also goes scuba diving to seek underwater thrills.

Set goals in lifePsychological books are part of Kerboriou’s reading habits and he has consumed most of Dale Carnegie’s writings. Currently, he is studying Neuro-Linguistic

Programming (NLP), which he says is good for human resources development. NLP is considered as a controversial approach to psychotherapy and organisational change. NLP is based on ‘a model of interpersonal communication chiefly concerned with the relationship between successful patterns of behaviour and the subjective experiences (especially patterns of thought) underlying them”. This system of alternative therapy seeks to educate people in self-awareness and effective communication, and to change their patterns of mental and emotional behaviour in order to help them achieve specific goals in life.

Everyone should have some goals in life and a personal drive to achieve them, says Kerboriou when asked what his plans are for the future. If you want to attain your goals, you should announce them to your friends and family as this will make you to remain committed until you reach that goal. There are numerous examples of this, says Kerboriou. He

cites the example of Bruce Lee who was noticed as a karate champion at a very young age. When journalists asked what he wanted to become in life, Bruce Lee had said he wanted to be a star and he did become a movie star.

On a philosophical note, Kerboriou believes that every person should programme themselves to live the present moment to the fullest because if you wait to do or achieve something later on in life, the body and mind may not be functioning at the same optimum level as before.

Having worked in diverse professional capacities of marketing, sales and finance, Kerboriou says that one day he would like to start his own company or become the head of a telecom company. For a multi-faceted personality like Kerboriou, we can be sure that opportunities would come knocking at his door because excelling in what he does and living life to the maximum are part of his nature.

PERSONALITY

60 September 2010

REAL ESTATE

Oversupply of housing has been so huge that some economists are advocating demolishing whole neighbourhoods to take supply off the market

Housing market key to avoid a double dip

BY SUDHAKAR REDDY

The author is General Manager,

Al Habib & Co. The question being asked is will America experience a double dip recession. As

the largest economy in the world, what happens in the US will have a bearing on the world economy. As far as the GCC countries are concerned, US is the largest consumer of oil and a weak American economy will mean weak demand for oil and hence lower prices.

In most of the post-war recessions in the US, housing led the economy out of recession with the housing market improving a few months before the recession ended. This has not been the case in the latest recession of 2008/2009. Eminent economists including former Fed chairman Alan Greenspan say that the housing market is key to the US avoiding a double dip recession.

It is important to understand what happened in the last decade or so to foresee what is likely to happen. Home ownership increased dramatically in the US and in other developed countries as mortgages were made

available to all and sundry without any respect to the borrower’s capacity to repay. Home prices kept rising and mortgage brokers convinced lenders and borrowers that the rising values alone would enable the borrower to repay. This looks a fantasy world now but looked plausible at that time. This was aided by easy money policies followed by central banks in many countries with interest rates kept artificially low for extended periods. (Interest rates are even lower now, and near zero in the US, but the difference is that credit is scarce unlike in the past). Investment banks on Wall Street acted recklessly by parceling these mortgages (called subprime) and selling them to innocent investors who were unaware of the underlying risks.

Length of bubbleIn the long run, demand and supply determine real estate prices and prices are related to nominal income growth. However, during the long period of rising prices, supply increased dramatically in many countries as lenders poured in money into

mortgages. The length of time that a real estate asset bubble lasts determines how much oversupply there will be. In the US, the property bubble lasted a decade or more during which a large amount of oversupply was created and in real estate once supply comes on it cannot be withdrawn. The oversupply is so huge that it will take many years for it to be worked off. In fact, some economists are advocating demolishing whole neighbourhoods to take supply off the market.

The bubble lasted a few years in Dubai but the increase in supply was very rapid and considerable excess supply got built up in a short period. It will take many years for Dubai to work off the excess.

In Oman, the bubble was too brief and supply did not get built up. Many large projects that were announced could be shelved before they got off the ground. Therefore, in Oman while prices have receded from their peak in mid 2008, there is very little excess supply and hence far less pain to property developers.

62 September 2010

When Samatel, the latest telecommunications provider, launched its services in Oman recently, besides the

mobile services, a lot of stress was laid on its contact centre. Additionally, the company disclosed that more call centres would be opened in Mabela and Bid Bid respectively within a year. The contact centres of Samatel are expected to offer business solutions, including telemarketing, helpdesk and one-stop-shop marketing services.

To help get its contact centres up and running, Samatel tied up with Teleperformers – the biggest outsourcing company in the world. For its mobile operations, Samatel entered into an agreement with Effortel from Belgium, an MVNE (mobile virtual network enabler), which facilitates the entry of companies into the mobile reselling business.

Obviously, the contact centre and the mobile services involves a lot of IT infrastructure beginning from “SunRay Desktop replacement solutions” to complex data servers and all the other paraphernalia in between. The notable part is that Samatel roped in Oman Computer Network Systems (Oman CNS), a major regional ICT system integrator and managed services company.

“Over the years we have selected best-of-breed Original Equipment Manufacturers (OEM) for IT infrastructure products and best-in-class specialists for middleware products. Which is why Samatel, a start up company in the telecom field chose us to set up their IT infrastructure,” says

ON CLOUD NINEThe Middle East IT market has grown responding to technological

developments and innovations. Visvas Paul D Karra logs in to find

out how the Omani IT sector is faring

INFORMATIONTECHNOLOGY

Mufaddal Nafar, Area Sales Manager, Oman CNS, while talking about their association with Samatel. Oman CNS as a leading system integrator from UAE now offering high quality of services and turnkey IT solutions from KOM.

“Clients are attracted by our structured DREAM methodology (Define, Review, Engineer, Accelerate, Manage) by which we have created an organisation that can simplify end-to-end ICT needs of big or small companies, starting from the design and staying with the client

throughout the technology lifespan,” says Nafar while talking about the activities of Oman CNS. Samatel and Oman CNS are two of the examples of how IT in Oman is growing at broadband pace as an increasing number of companies reap the benefits of modernising their operations by spending on modern IT technologies.

Billion-dollar markRecent reports by the Economist Intelligence Unit (EIU) indicated that the Sultanate’s thriving Information Technology services industry is poised

63September 2010

to grow by 10 per cent and will cross the half a billion dollar mark by 2011. Oman along with Qatar, Bahrain, and Jordan, will play significant role in the Middle East IT services market, which is to hit $3.5bn by next year, the report said.

The IT market in Oman is only about 10 per cent the size of other GCC markets, but the government is investing in IT as part of its Digital Oman initiative and strategy to diversify the economy. In addition, there is a rise in demand for IT services from verticals such as oil & gas, telecommunications, aviation and financial services.

Says Sameer Gupta, executive vice president, Infoline: “Sustainable growth in the ICT sector has backed economic progress and provides a strong platform for the development of SMEs. The SMEs, in turn, have invested heavily on advanced and innovative technologies, which have been a key contributing factor to increased IT spending in the region.”

Infoline is a premiere brand in the growing sunshine industry of IT and ITES (IT Enabled Services) with one of the largest contact centre in Oman.

Further, economic reforms and trade liberalisation will initiate more spending by both public sector organisations and enterprises and the areas of predominant investment will be e-commerce platforms and back office systems; cloud computing; and IT infrastructure management.

Five-year bull run“The IT sector in Oman began to look bullish from 2005 onwards when investments into large projects began pouring in and the government took up large scale infrastructure development. There has been an average growth of 8-10 per cent year-on-year in the IT sector with more than $300mn being spent this year alone,” says K Ram Subramanian, GM, Information Technology Division of Imtac, one of the premier technology providers in the Sultanate.

The term IT mainly deals with computer applications computing technology, covering everything from installing applications to developing databases. Today, the common work environment

is completely automated and totally dependent on computers. One of the main reasons for this tremendous growth has been the internet, which Subramanian says, has been a big enabler and differentiator as it has become the platform on which the technologies are running now.

Starting as a distributor of Hewlett-Packard (HP) in 1984, Imtac managed a consistent growth since then to emerge as one of the largest technology companies in the Sultanate. The company is one of the few with complete and locally available expertise to carry out large technology projects in the region.

Subramanian says that several e-services being rendered by government organisations like the Muscat Municipality’s parking violations, Rent Contract System and other solutions have been provided by Imtac.

Similarly, Imtac has implemented the National Payment System and other automation services being rendered by CBO. Imtac’s clients include at least four major banks and other large corporates like PDO, ITA, Ministry of Health and Oman Refinery and Petroleum Company. All these organisations have a strong IT backbone.

Increased IT awarenessUjjawal Tankha, country head, Max Electronics, which runs the Emax Store feels that once individuals and businesspersons realised the necessity of computers at home, the awareness levels of technology began to rise and soon it became a natural extension that they began to utilise IT in their companies and offices.

Says Tankha: “Previously, there used to be a single mobile handset per family.

Mufaddal Nafar, Area Sales Manager, Oman CNS

64 September 2010

Now every adult member has more than one handset. This trend is now catching up with computers as well. The father will be having a laptop besides the desktop computer at home. Then the college-going children also need a laptop for their studies. This way, every home has now begun to have two or three computers or laptops.”

The large-scale economic developments in the Sultanate have definitely helped the growth of IT, says Tankha. “The last two years have been like a boom-time,” he admits while saying that laptops, computers, hardware like printers were the fast moving products at the Emax store, set up at Muscat City Centre in 2007.

Continuing further, Tankha says that the popularity of the social media like Facebook and Twitter has only enhanced the value of internet, which in turn helps in the growth of IT. As many companies begin to integrate social media into their publicity campaigns, it only added to the rising demand for IT products, he adds.

Gupta concurs with this when he says that IT has always been an essential tool of commerce, but it has become increasingly

important since the development of the personal computer and the Internet. Consumers and clients demand efficient service and rapid communication, and even the smallest of small businesses

cannot do without effective information technology.

“The most significant advantage of employing information technology is data knowledge. With the development of email, texting, and the wide variety of social media technologies, consumers demand an almost immediate response – and IT services can provide that immediate communication effectively and inexpensively,” adds Gupta.

Computer-controlledThe computer in its myriad forms has permeated all areas of our life, says Haitham Abu Nasser, general manager/ partner, Integrated Systems (IS). Take a car for example, says Nasser. The computer chip inside the car’s system is involved in the smooth running of the vehicle and all safety aspects are controlled by it. This is the way forward for us as we utilise the benefits of IT to make our life easier and convenient, Nasser opines. The government’s Digital Oman strategy, which is being spearheaded by the Information Technology Authority (ITA) is actually a step in that direction. The eGovernment services portal’s stated aim is to transform the Sultanate of Oman into

INFORMATIONTECHNOLOGY

Rahul Bhavsar, Business Head, Middle East, Gulf IT

Haitham Abu Nasser, General Manager and Partner, Integrated Systems

a sustainable knowledge society to empower the people and businesses with information and services by delivering all eGovernment services through a common gateway in a seamless manner.

“Integrating government services with businesses and individuals requires massive IT infrastructure and implementation of new technology solutions to gain competitive advantage and achieve business goals. Therefore practically every IT company in Oman is involved with ITA in one way or other as vendors or partners,” says Nasser.

Integrated Services, which is a full service company providing IT infrastructure, security, safety, building management, communications and audio visual expertise, offers complete turnkey solutions and has clients from the public as well as the private sector. When organisations realise that they can cut down costs between 20-40 per cent by automation of their processes, then they decide to implement IT in their companies. This will fuel the growth, says Nasser.

Cloud computingGone are the days when Tally was the frontier in IT. Many of the new technologies are adding value and providing new opportunities for

businesses as newer applications speed up production processes and accounting systems. As key business processes began to be identified, the need for associated information requirements, hardware, software and bespoke applications began to grow. Thus, IT began to be aligned with core business requirements.

With the evolution of technology and constant innovations by technology giants like Google and Microsoft, the mode of IT operations is changing. Cloud computing is emerging as a favourite among organisations, which want to cut costs and increase their operational efficiency.

IT service providers like Infoline and Gulf IT are popularising Cloud Computing and providing services using the Cloud Computing Platform – thereby ensuring IT solution offerings on par with latest global developments.

Cloud computing is basically done with Google Apps which has email, calendaring, instant messaging, document,

K Ram Subramanian, GM, Information Technology Division of IMTAC

66 September 2010

spreadsheets and presentations, site creation and video without having any software of your own, says Rahul Bhavsar, business head, Middle East, Gulf IT.

“The applications are hosted by Google, so you can just turn them on and get to work quickly. With this cloud computing approach, you don’t need to worry about installing, maintaining or upgrading software, and you always have access to the latest technology. You can also use any device: PC, Mac, Linux, Android or iPad, if it has a web browser and a connection to the Internet you can access your information from anywhere,” Bhavsar says.

“The cost savings are compelling, especially when you’re on a tight budget: cloud computing is about one tenth of the cost of on-premises software. It’s also more secure than storing data on laptops and USB keys that are easily lost or stolen,” adds Bhavsar.

Along with cloud computing, another IT solution is cloud codes, which provides an ease of use, affordable, and reliable source for getting all the Small & Medium Enterprise (SME) software needs in

the cloud. This single development and delivery model significantly reduces the time and costs associated with the development and delivery of enterprise systems.

Way forwardThe MENA region has gradually started capitalising on the global wave in IT Enabled Services (ITES). As countries strive to develop knowledge based economies, the growing demand for IT and ITES would rise. However, it has been observed that companies are reluctant to make huge investments in technology and hence resort to outsourcing.

The customer contact centre industry across the Middle East is to a large extent at the developing stage and definitely, a vision exists for a more matured growth in the long run. One of the latest regulatory developments in the Middle East has been the initiatives towards opening of VOIP (Voice Over Internet Protocol) which will lay the foundation for Middle East contact centres standing up on par with the global standards.

“Corporate leaders have realised to be ahead in the rat race means a blend of visionary management, cost effective-ness, latest technological platform, quality output and the most important customer satisfaction. We at Infoline as-sure our clients with all the above com-ponents and help them achieve success,” Gupta added.

INFORMATIONTECHNOLOGY

Ujjawal Tankha, Country Head, Max Electronics

Sameer Gupta, Executive Vice President, Infoline

Norfolk Island

Northern Mariana Islands

Norway

Oman

Pakistan

PaPaPaPaaaalalalalalaau

PPPaPaPaPP nnnanammmmamm

68 September 2010

VIEWPOINT

The financial crisis has highlighted the need for companies to develop a plan of action to capitalise on opportunities

Real estate: Survival and growth

BY SRIDHAR SRIDHARAN

In the current global economic envi-ronment, real estate investors, owners, developers and build-

ers worldwide are primarily focused on two issues:

Managing their companies through the recession Positioning their companies for future growth as global economies and property markets start to recover

At the beginning of 2009, the outlook for global property markets was bleak. Though there have been some bright spots since then, the current climate is decidedly mixed.

TWO CLASSES OF COMPANIESThe recession has had the effect of separating real estate companies into two classes. In one class are companies that, at the first signs of the recession, had the foresight to refinance their short-term debt with longer term borrowings at modestly higher rates. The other class comprises companies that were slower to react. By the time, these companies tried to refinance or were forced to do so because of debt maturing, banks had

tightened loan requirements.

A NEED TO TAKE ACTIONThe credit crisis and global recession have highlighted the need for companies to develop a plan of action to capitalise on opportunities, address the risks in their investment portfolios and operations and position their organisations to grow and compete in global property markets. Companies with strong balance sheets and access to capital are considering whether to buy distressed commercial properties in select global property markets. Conversely, highly leveraged companies are preoccupied with crisis management. Regardless, these companies also need to look ahead and plan for the future of their organisations in the global real estate market that will emerge from the recession – a market in which developers, investors and lenders will be more attuned to risk.

ACCESSING LIQUIDITYThe recession has refocused companies on the need to have a strong liquidity position: to hedge against a future liquidity squeeze or other contingencies and to accumulate cash for future investments or other

purposes. Many companies are trying to increase their liquidity through various means.

MANAGING CASH FLOWSReal estate executives spend most of their time fire-fighting: protecting assets, controlling costs, and, most importantly, managing cash flow. Some real estate companies are stress-testing their cash flows, i.e., creating different scenarios and analysing the effects on cash flows. Others are changing their cash flow models and creating or improving systems that warn of potential cash shortfalls.

REFINANCING DEBTTo date, lenders globally have generally preferred not to foreclose on loans and assume ownership of the collateral (Real Estate Owned – REO). How long lenders will continue to keep delinquent loans and REO on their books is uncertain. Banks could come under pressure from regulators to write down and sell problem loans and dispose of REO. One result of lenders disposing of problem assets is that a flood of properties could come on a country’s market, further depressing prices.

The author is Managing Partner,

Ernst & Young, Oman (sridhar.sridharan@

om.ey.com). This article is extracted from Ernst

& Young’s publications on Lessons From

Change

PROJECTSWATER • ROADS AND BRIDGES • INFRASTRUCTURE

COMMERCIAL / RESIDENTIAL • HEALTH • EDUCATION

LEISURE AND SPORTS • POWER AND STP

CONSTRUCTINGA PROGRESSIVE OMAN

70 September 2010

VIEWPOINT

REAL ESTATE EXECUTIVES SPEND MOST OF THEIR TIME FIRE-FIGHTING: PROTECTING ASSETS, CONTROLLING COSTS, AND, MOST IMPORTANTLY, MANAGING CASH FLOW. SOME REAL ESTATE COMPANIES ARE STRESS-TESTING THEIR CASH FLOWS

RE-EVALUATING RISK MANAGEMENTIf there is one lesson that companies have learned, or should have learned from the recession, it is that sound risk management is key. Companies are re-evaluating their risk management policies and practices, beginning with an analysis of their track record in risk management.

A HARD LOOK AT COSTSReal estate companies are seeking to improve their performance, and that begins with more effective cost management and greater operational flexibility. On the asset side, companies are conducting detailed analyses of the ability of assets to generate cash flow and appreciate in value. In the process, they are determining which assets to hold and which to sell (when market conditions are right).

RETHINK OF BUSINESS MODELWhen global economies were booming, real estate developers and owners tended to focus less on operational or administrative issues. But the recession has forced them to take a hard look at their business models and consider whether

to make changes. With global investment activity picking up, international investors are seeking to form more alliances or partnerships with local partners to leverage their local knowledge and expertise. The recession has caused real estate company owners and principals to become more active in the management of their businesses.

MANAGING INVESTOR EXPECTATIONSCompanies have to manage the expectations of investors, who were accustomed to realising very high returns in boom times, but who now may have to accept lower returns as some companies focus on lower yielding but lower risk investments. In boom times, the R word was ‘Return’; now it’s ‘Risk’.

LONG-TERM GROWTHThe slowdown in development and transaction activity in the recession has given real estate executives some breathing room and enabled them to reflect on their organisations. Extending their company’s market reach, accelerating decision-making and strengthening their management capability are

among their top priorities.

NEW OPPORTUNITIESOne of the most challenging questions for real estate executives is how to build sustainable organisations that will continue to adapt and grow in an increasingly global and competitive real estate market. The global recession has taught executives what haven’t worked for their organisations, and now they are focused on what will work. Their attention is on solid, long-term growth, not financial engineering.

RECRUITING, RETAINING TALENTReal estate CEOs are evaluating the talent they have, and the talent they will need to support future growth. Companies now recognise the importance of having people with deep and tested real estate experience and skills. Given the market downturn, there may be many strategic hiring opportunities – at the right price – for companies with the resources to invest.

LOOKING AHEADThe recession has been painful for the real estate industry. It has tested the mettle of

executives as never before as they grapple with the shifting landscape. For those with capital availability, the top priorities include: seizing opportunities; addressing risks in investment portfolios and operations; and positioning for growth. For those still struggling to survive, the focus is on liquidity and cost-cutting.

Regardless of their market position, companies need to look ahead and plan for the future. Executives with the fortitude to make the bold moves will position themselves well to build sustainable organisations that will continue to adapt and grow in an increasingly global and competitive real estate market.

We are entering a new and changing world. Executives, who show ingenuity, have the courage to make tough decisions and demonstrate the foresight to apply lessons from change will guide their companies to success in the real estate sector. And they will be the leaders who establish the foundation upon which our new global economy will rise.

72 September 2010

Oman’s Minis-try of Health recently de-clared that it is currently working

on a number of significant health-care projects at a total cost of more than RO73mn in an effort to develop the health-care services for citizens in the Sultanate.

There are at least three major hospital projects currently underway – the RO50mn Psychiatric Hospital Project; a Heart Disease Centre and Magnetic Resonance Unit in Salalah, costing around RO18mn; and the third being the National Centre for Genetic Health, worth around RO5mn. The health ministry also said that in coordination with the private sector, it is working to establish a number of projects related to health quality, which amount to RO40mn.

The ministry is also carrying out a number of other projects related to health centres and other rehabilitation and expansion projects as part of its seventh Five-year plan at a total cost of more than RO60mn.

Growing demandA report by Alpen Capital suggests that the overall

GCC healthcare service market is valued at a little

over RO7bn and is expected to grow to RO20-22bn by 2020 equivalent to a nine per cent CAGR over the next 10 years. This means that more healthcare services will be required on aggregate as well as per capita. This is not only due to a growing population but also because the Gulf baby boomers born during the region’s first oil price boom will enter the aged category.

The proverbial ‘an apple a day’ will no longer keep the doctor away as there are other factors also that drive the demand for healthcare services in the future. Communicable diseases such as malaria and tuberculosis have been substantially controlled through increased hygiene and higher availability of vaccines. However, while there is a decline in communicable diseases, a huge jump in lifestyle diseases such as cardiovascular ailments and diabetes related diseases has exposed the need to augment the

supply of hospital beds for the growing demand for medical care.

According to WHO reports, the number of diabetic patients in the GCC is expected to increase 2.5 times the present number by 2030 with Kuwait and Oman leading the pack. Consumption of unbalanced diets and a more sedentary lifestyle, thanks to urbanisation and growing per capita income, are aggravating the prevalence of lifestyle diseases. One can safely add that coronary problems and obesity-related complications are also on the rise.

Private participationDespite the active public-private partnerships in the healthcare of Oman, the industry is characterised by low private sector penetration. A majority of the private healthcare providers are polyclinics and there are only three private hospitals in Oman.

Murat Soner Kucukkaya, hospital administrator, Muscat Private Hospital (MPH) predicts that the private sector is going to be the leading health services provider. His firm belief is based upon

A SHOT IN THE ARMThe Sultanate of Oman faces

several challenges in the healthcare

sector despite commendable

success on several fronts. The good

news is that the private sector is

trying to fill in the gap. An overview

by Visvas Paul D Karra

HEALTHCARE

73September 2010

increased public expenditure, combined with deliverable high quality private health services.

As hospitals like MPH continue to invest in modern technology and cutting edge medical equipment to complement their already established healthcare services, an ever increasing number of patients trust and recommend the treatment received at private hospitals. Kucukkaya, who came to MPH from Acibadem Healthcare System, Istanbul, Turkey, previously held positions as hospital director.

Kucukkaya states that MPH, is a 72-bed general medical hospital, established in 2000, and the first private facility in Oman providing cardiac surgery services. Strategically located in Baushar, the hospital provides out-patient and in-patient facilities and has diagnostic and treatment capabilities with state-of-the-art acute-care facilities; CCU, fully-equipped ER, Paediatrics, Obstetrics and Gynaecology, MRI, and a 64-slice CT delivering cardiac angiography, colonoscopy, lung and neurological imaging.

“Government hospitals historically have been associated with anecdotal accounts regarding long waiting lists. The public are no longer ready to wait in long queues when fast, affordable, dynamic healthcare is available at the point of entry to the hospital, and patients are looking in our direction and identify with our vision,” Kucukkaya observes.

He further feels that if one had to look at this scenario from a wider angle, then there is a lot of scope for greater public-private participation. Governmental policy decision to include private hospitals in the country into the list of referral hospitals, which presently is limited to big government hospitals in the capital area of Muscat, will facilitate greater public choice and autonomy.

Investments in infrastructureAlmost 75 per cent of the total healthcare expenditure is being incurred by the State but the private sector lags behind in establishing hospital infrastructure. But, as the economies of the region grew on the back of high oil prices and multi-billion dollar investments go into various other sectors like real estate, manufacturing

DM Healthcare is the first private sector organisation to be recognised by government organisations, all major companies, corporate and embassies in the country

– Seeniya BijuSenior Manager, Al Raffah Hospital

etc, expatriate labour was added to the local populace. Consequently, the market for healthcare services increased which in turn brought out the necessity for more hospital beds.

Al Raffah Hospital was established by Dr Moopen’s (DM) Group in Muscat around two years ago. The DM Group has recently rebranded its healthcare vertical as ‘Aster’ to integrate the current brands

74 September 2010

of hospitals, polyclinics, pharmacies and diagnostic centres at 95 locations under one name. Aster interfaces with existing and new customers through Aster Hospital, Aster Medical Centre, Aster Pharmacy and Aster Diagnostic Centre.

According to Seeniya Biju, senior manager, Al Raffah Hospital, DM Healthcare is the first private sector organisation to be recognised by government organisations, all major companies, corporate and embassies in the country. In order to cater to the growing demand for medical care, Aster has major expansion plans in Oman, informs Biju, while also stating that the word Aster means flower in Greek. True to its meaning, Aster is flowering in Oman. After Al Raffah, Aster opened a super-speciality 50-bed hospital in Sohar, which was inaugurated by Dr Azad Moopen, the founder of DM Group.

Biju states that the Vision 2015 of the DM Group involves investments of

in their current business objectives.

Infrastructure expansion has also been undertaken by polyclinics as well. In the past five years, Badr Al Samaa Polyclinic has opened branches outside Muscat in places like Barka, Nizwa, Sur, Sohar etc. Similarly, Dubai-based Welcare Hospital and India’s Apollo Hospital have also set up their affiliates in Muscat.

Quality of healthcareOman’s private hospitals are in the nascent stages of offering super speciality services, partly because of government regulations and partly because of the lack of demand caused by demographic reasons, which does not justify the investments.

Some of the inpatient and outpatient services provided by private hospitals include cardiology, orthopaedics, neurology, general medicine, woman’s health, urology, paediatrics, general surgery, dermatology, endocrinology, ENT, gastro-enterology ophthalmology, anaesthsiology, family medicine, plastic and cosmetic surgery and dentistry.

Apart from that, other hospital services also include 24 hrs emergency and trauma care, 24 hrs pharmacy, telemedicine, corporate services, ambulance services and clinical laboratories.

Government regulations do not permit all private hospitals to offer super-speciality surgery services like cardiac bypass and critical services; chronic and potentially life-threatening diseases like cancer for example. The exception is MPH which is Oman’s first private hospital to start a cardiac surgery programme for the correction of cardiac disorders.

This cuts both ways because while hospitals say they have less demand for such critical services, most affluent citizens and resident expatriates go abroad or to their home countries for specialised treatments citing inadequate facilities in Oman.

But some of the hospitals are apparently excelling in what they do. Biju of Al Raffah says they were able to successfully conduct a knee replacement surgery on a 73-year-old. Further, Al Raffah offers consultations only by prior appointment

MPH, a 72-bed general hospital established in 2000, is the first private facility in Oman providing cardiac surgery services

– Murat Soner KucukkayaHospital Administrator

Muscat Private Hospital

$500mn all over the GCC region. Out of this, $27mn will be invested in Oman to build three hospitals, 15 medical centres and 15 pharmacies.

“The private hospitals and medical centres in Oman are in great demand because of the long waiting periods at the government hospitals in Oman. Otherwise, the public healthcare facilities are world class in the Sultanate. Another reason is that there is shortage of doctors and paramedical staff in the government medical centres,” explains Dr Sanjay Dalal, chief manager, activities and promotions of KIMS Oman Hospital (KOH) located in Darsait while talking about the recent growth of private health care facilities in the country.

KOH, which opened in June 2009, is a milestone in the private sector health care of Oman with its 50 beds and equipped with excellence in healthcare delivery. KOH is the protégé of Kerala Institute of Medical Sciences (KIMS), a prestigious 450-bed multi super-speciality tertiary referral hospital from Kerala, India. KIMS India is accredited by ACHSI (Australian Council on Healthcare Standards International) NABH, ISO for its Quality Healthcare Services. The KIMS Healthcare Group has medical centres in Saudi Arabia, Bahrain and Qatar.

International affiliations or accreditations lend credibility and respect, inspiring confidence among patients of all nationalities. MPH is managed by the UME Group – an international hospital management group with more than 28 years experience in the Middle East and the UK – and is leading the way by incorporating international accreditations

HEALTHCARE

insurance to their employees. Even then, most people are not confident about the medical services here. Recent reports have indicated 20,000 Omanis travel to Bangkok annually for treatment. Therefore the need of the hour is to strengthen your own hospital facilities to

attract patients,” Dalal points out.

Differing from Biju, Dalal says the cost of treatment is going up mainly because the profile of players involved in medical care has changed drastically. Previously it was only the doctors who used to decide the type of treatment but now the main players are the insurance companies who are interfering with the workings of hospitals and doctors. It has reached such a sad state that a doctor has to take pre-approval for all kinds of facilities to be provided to patients, right from admitting a patient, the type of treatment and even the kinds of medicines. How can doctors work under such circumstances? Therefore, the cost of treatment has gone up, says Dalal, mincing no words.

The most hurting factor is that while the West is trying to reform healthcare and insurance systems, we are trying to get into that same situation which they are trying to avoid, Dalal adds. Hopefully, this scenario would change soon.

KOH, which opened in June 2009, is a milestone in the private sector healthcare of Oman with its 50 beds and excellence in healthcare delivery

– Dr Sanjay Dalal, Chief Manager, Activities and Promotions

KIMS Oman Hospital

in order to differentiate itself from other polyclinics, says Biju but that does not mean they will reject any walk-in patient if the situation demands. Talking about the cost of treatment, Biju adds that expatriates and even Omani residents should fully utilise the services provided by the local hospitals instead of hopping on a plane and flying to some other country. If one takes into account the expenses incurred for air tickets and stay, the costs would amount to the same.

Insurance is the keyKOH is one of the best private hospital in the country with its own custom-built 50-bed hospital, claims Dalal when asked about the services provided and cost of treatment. “We have all the facilities that any hospital can boast of and people have now come to know about the excellent treatment that we give to our patients. We are doing all kinds of surgeries including neuro and laproscopy in three state-of-the-art operation theatres,” says Dalal.

“Many companies are now giving health

78 September 2010

Starcare Health Systems, a United Kingdom-based health care consultancy company, which also runs a chain of medical centres in UAE, is

entering the healthcare sector in Oman in a big way.

Sadik Kodakat, chairman of Starcare Health Systems, UK, told OER that initially the company will open a 50-bed hospital at Seeb. The hospital will have facilities for laparoscopic surgeries and advanced treatments for various complications including orthopaedic and spinal problems. The initial investment by the group in the healthcare sector is estimated to be RO8mn.

“Starcare plans to open another 150-bed hospital, around 10 polyclinics and a chain of 15 pharmacies in different parts of the Sultanate in two-to-four years, Kodakat informs. The company plans to enter the healthcare sector in Saudi Arabia in future,” he adds.

Kodakat says the aim of Starcare is to bring US and European standards in the healthcare sector in Oman.

Need for new hospitalsAnswering questions on the relevance of new private hospitals in the healthcare sector in Oman, Kodakat says as per WHO studies, there is a mismatch between demand for healthcare and availability of facilities in the Sultanate. Starcare will bring the next level of skills to the healthcare sector in Oman, Kodakat says. Our effort is to raise the quality of

STARCARE HEALTH SYSTEMS COMES TO OMANUK-based Startcare Health Systems is set to open hospitals and clinics

providing specialised medical care in Oman. A Hari Kumar reports

PASSINGBY

Sadik KodakatChairman, Starcare Health Systems

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medical care available in the Sultanate, he says. On the healthcare sector in Oman, Kodakat says, the ministry of health had been doing a wonderful job overall and there was no need for private hospitals in the past. Presently, as the cost of medical care is escalating all over the world governments are seeking private participation in the development of healthcare sector. The situation in Oman is also not different. Though there is participation of the private sector in the healthcare sector in the Sultanate, it has not developed on a par with other countries. Our feasibility study has proved that there is need for high quality healthcare in the Sultanate, he adds.

“The Sultanate has several private players in the healthcare sector but few internationally accredited hospitals,” says Kodakat. Many hospitals in the private sector here focus on volumes rather than quality. It is high time that the next generation health care was brought here, he says. At the same time, one has to be cost conscious in Oman market. “Everyone is not affluent. Investors need to tailor

their strategies to ensure affordability with high quality.”

Commenting on the trend of Omanis going outside the country to seek specialised treatment, he says the most

important thing is to create confidence among patients about the facilities in the country and to ensure access to treatment without delay. “Our plan is to build a chain of satellite centres to bring medical care close to one’s home.”

AlliancesOn the possibility of strategic alliances, Kodakat says the group has several years of experience in the healthcare sector and is not going for any tie-ups with other hospital groups here or outside the country. Hinting at the company’s strategy in Oman, he said they are open to alliances with insurance companies and government departments. “We have already conducted discussions with different ministries in this respect,” he said.

The medical faculty, Kodakat says will include experts from the region, other Asian countries and the West. The hospital staff would be fully integrated to the system through special training. The advanced operation theatres would be built conforming to the guidelines of American Institute of Architecture, he added.

Starcare plans to open another 150 bed hospital, around 10 polyclinics and a chain of 15 pharmacies in different parts of the Sultanate in two to four years

80 September 2010

With CEOs under increased pressure to meet shareholders expectations on profit generation in the short term, how do you see them investing more on their people for long term gains?Some day, God willing, those people will be 67! When you are going to look into the mirror, you are not going to see quarterly profits. You are going to see the people you have developed. Would you like to be someone who met Wall Street expectations for 40 quarters in a row? I would like to quote Richard Branson. He fundamentally said that if it was not great for employees, you would go out of business.

It is not about money alone. Most of the efforts don’t cost money. I’m an old Navy man and I’ll share an experience from my Navy days. When Lord Nelson would take over a new fleet he would change the entire character of the fleet in a month. Because he had, Mandela like energy. There was respect for his sailors

‘Treat your employees like customers’,

said Tom Peters who was recently

in Muscat to conduct a day-long

seminar and promote his new book

‘The Little Big Things’. The acclaimed

management guru talked about what

corporate leaders need to do during

times of economic turbulence in a

candid conversation with Akshay

Bhatnagar. Excerpts of the chat:

KINDNESS IS FREE MANAGEMENT

81September 2010

and it was contagious. People respond to respect and appreciation presumably in any market in a pretty universal way.

Many US companies continue to outsource instead of investing more in their own human resources. What do you have to say about them?They are bad managers. There are two kinds of outsourcing. One is outsourcing for the sole purpose of minimising cost. Then there is outsourcing indeed with a labour cost component but for the quality of work. If you do it to reduce cost and you think you are smart as you can throw them out if required, you should look at partnering with them. People in US have argued loudly that corporates which are outsourcing should be penalised. I think it is nonsense. I think the American goal requirement as it stood for any other country is to develop our own towns and educational resources so that we could hold on to the jobs. If you are doing it to minimise the cost, your quality will go down, customer service will be affected, that’s the case. But if you look at partnering in opportunity, it changes.

China is taking over large MNCs in US and European markets. How is it going to impact the business leadership in these companies?I was in China for three days last year. They don’t want to be the workshop of the world. They want to play the value added game. I told them that a nation targeting to build up intellectual capital has to have a different relationship with its workforce first. Though US is not like France but we have tough laws in place. I told them that Americans are easy to play compared to the Europeans but we are not going to accept food for babies that is poisoned. Though it is not my area of expertise but when China gives aid, say, to African countries with no strings attached, it is worrisome.

What is your advice to companies operating in a less turbulent economic environment – aim for higher growth or focus on stability?I would say first things first: Aim for a totally energised work force. I’m in favour of aggressive competitiveness but not terribly charmed when in the midst of a great recession somebody takes

advantage of a failing company. We should not behave like sharks. People remember acts of good behaviour in a downturn much longer than they do in an upturn. I wrote somewhere in my new book: “Look if I’ve got a competitor who is going out of business I’m not going to pay his bills that’s for sure but I’ll not start stealing people from him. Behave decently for God sake!”

To answer your question, I think there has to be an emphasis on growth in some form or another. Aiming to be static is not exciting. If the company is in a good shape financially and there are opportunities and things that can be acquired less expensively and if you happen to be sitting on a pretty good heap of cash in Oman, use it. But remember most big acquisitions don’t work.

The greatest danger for most of us is not that our aim is too high and we may miss it but that it is too low and we will reach it. Excellence can be obtained if you expect more than you think is possible. Dream

more than others think is practical. Care more than others think is wise. Risk more than others think is safe.

How has Tom Peters changed from In Search of Excellence to The Little Big Things?One of the things I’m trying to do in my new book compared to the first one I wrote long time back is to go back to human basics. In this age of Internet and social networking, the world has changed. But it is still about people. The fundamentals of relationships with people have not changed probably since we started evolving thousands of years ago. We are what we are not due to our analytical abilities but due to our social networking ability. The magic of humans differentiating from the rest was that we could form communities. That was good management. You and I can’t beat a tiger individually but if we form a group of people, we can. That’s what scientists term as social grooming. It’s the social glue and it is important. Despite being primitive they could build communities. It has always been about relationships.

I’ll quote Donald Trump who said that if the relationship with company A is better than company B I would rather do business with company A. That’s the real world.

I’m a regular user of Twitter. I got a blog site that’s among the top 10 management leadership blogs. It is all about people and people. I may sound Darwanian but we have not changed much from what we were 50,000 years ago.

What made you write The Little Big Things?It just happened by chance. In my blog, I had been giving tips on achieving excellence. It was all about tiny little things that leads to an enormous impact on the business. Over the years, the number of tips touched 176 mark. Then one day a publisher sent an email to me – “You have inadvertently written your new book”. That was the trigger and I started working on the book.

ONE OF THE TIPS FROM THE LITTLE BIG THINGSBOTTOM LINE IN BAD TIMES: OBSESS OVER THE TOP LINE

Containing costs in tough times is imperative – especially given our relative sloppiness when markets were soaring. But assuming that cost-control-r-us is a bad mistake. Working to improve the distinction of our products and services is more important than ever. In the toughest of times, there’s a lot of business left – and we want an “unfair” share of it, right?

You and I can’t beat a tiger individually but if we form a group of people, we can. That’s what scientist’s term as social grooming. It’s the social glue and it is important

OER is the media partner for the event

82 September 2010

ECONOMYOLIVER CORNOCK

Since 1947, a team of scientists at the University of Chicago has maintained a

‘Doomsday Clock’: a symbolic representation of how close the world is to a history-ending catastrophe. Based on the consensus of experts, the time on the clock is changed periodically, with every minute closer to midnight signifying a step in the direction of a global disaster. The hands of the clock can be moved in both directions: the closest it has ever come to midnight was in 1953, when the Soviet Union and the US tested nuclear bombs within nine months of each other; the furthest was in 1991 when the US and Soviet Union signed the Strategic Arms Reduction Treaty.

For generations, the Doomsday Clock translated the complicated scientific jargon and alarming media coverage of the Cold War into a simple, compelling statement. Each step closer to midnight was terrifying, but also proved to be an effective way to raise public awareness and rally calls for nuclear disarmament.

FUTURE SANS PETROLThe importance and recognition of the Doomsday Clock in popular culture has receded somewhat since the end of the Cold War. However, imagine, for a minute, if a body

of experts convened to produce a symbolic representation estimating when hydrocarbon reserves would run out.

This will be no doomsday, to be sure, as the ever-growing roster of renewable energy sources promise that the human race will be able to survive, somehow, without diesel-powered SUVs. However, the day when the last gas plume peters out will mark a sea change in our ability to conduct certain energy-intensive activities, from air travel to chemical refining, which are indispensible to our current way of life.

As some groups focus on preparing for a post-petroleum future, others are developing innovative ways to extract the most from existing oil and gas wells. Oman has become a centre for just this sort of innovation. The government-owned Petroleum Development of Oman (PDO) has been focusing on development in the fields of enhanced oil recovery (EOR) and natural gas extraction for almost 30 years.

EOR EXUBERANCEOman’s earliest EOR experimentation began with projects in hot water injection at the Qarn Alam field in the 1980s, while polymer injection was tested at the Marmul

facility. These initial efforts, and follow-up projects in the 1990s, gained new potency when Oman’s oil output entered a decline – thought by many to be irreversible – after a peak in 2001.

Using traditional methods, primary and secondary recovery, the quantity of crude that can be extracted from an oil field is generally between 20 per cent and 40 per cent of the oil it contains. EOR solutions enable companies to reach more of the oil in a well – at the moment, EOR technology enables extractors to extract between 30 per cent and 60 per cent of estimated reserves.

While the techniques under development vary widely, they are based on two principles that enable further extraction. The first is the introduction of gases to the well that change its pressure, enabling companies to force further oil out of its confined space. The second principle involves affecting the oil itself, introducing a change to its viscosity that enables it to flow more easily at lower pressures.

EARLY EOR EXPERIMENTSThe first exploration into EOR techniques came from well beyond Omani shores: the Kern River field in California was the site of the earliest EOR extraction, where engineers

Thinking AheadEOR techniques gave a boost to the hydrocarbon production of Oman leading to a healthy energy sector

The author is Regional Editor,Oxford Business

Group

84 September 2010

ECONOMY

PDO HAS BEEN FOCUSING ON DEVELOPMENT IN EOR AND NATURAL GAS EXTRACTION. THIS TECHNOLOGY IS HIGHLY VALUABLE, AND ONLY LIKELY TO BECOME MORE SO, AS CONVENTIONAL OIL AND GAS RESERVES ARE EXHAUSTED

introduced steam to the well in an effort to heat the oil in 1964. Known as thermal extraction, this technique affects the oil’s viscosity and allows it flow more easily. The next breakthrough came in 1977, when engineers at the Alaskan Prudhoe Bay field injected natural gas into a dwindling oil field.

Variations on this method have so far been the most popular method of extraction, as the gas reduces the viscosity of the oil while increasing pressure within it, facilitating the oil’s rise to the surface. Other methods – including the use of chemical solvents and microbes to reduce the resistance of the oil to flowing - have traditionally been seen as too costly or complicated for widespread use.

Yet recent developments in Oman have shown marked progress in these lesser-explored methods of extraction. In 2005, PDO signed an agreement with Petrofac to develop its Harweel facilities and enable the use of miscible gas injection, a process whereby natural gas is blended with oil to reduce its viscosity. The project brought some 18,000 bpd of production on-line in phase one, and the second phase is expected to be complete this year. Meanwhile, the Marmul

field is seeing the expansion of its polymer injection process, which is anticipated to bring an additional 8000 bpd to production.

RECORD SETTINGThe Qarn Alam field is also being transitioned by the PDO from its early experiments into the world’s first full-field steam injection EOR project, and could see a jump from 1,200 barrels per day to 30,000 for the next three decades. The project is expected to be fully operational from the second quarter of 2011. Occidental Chemical has been developing the Mukhaizna field since 2004

and anticipates that its steam thermal EOR project will enable it to produce 150,000 bpd by 2012, up from its present 100,000. At the Amal fields, earlier developments are also being rolled into a steam injection process, set to be complete in 2012.

As a result, there are currently five major EOR projects under way. The return has so far been impressive: oil exports grew 7.4 per cent in 2009 and then 8.7 per cent in the first quarter of 2010. Oman’s minister of oil and gas, HE Mohammed bin Hamad Al Rumhy, told the press in April

that production is expected to increase to between 850,000 and 900,000 bpd in 2010.

GAS SUPPORTThe energy necessary for generating heat for these projects comes largely from natural gas, and these projects have played a part in increasing the domestic demand. In February 2010, the government announced that it would hold much of its gas production for use on local projects. The announcement comes despite a number of developments set to increase production levels, which stood at 85m cu ft in 2009. In addition to newly-discovered gas reserves at Khulud, BP is expected to bring its Khazzan and Makarem fields on-line soon. A test site at the Khazzan field yielded 40m cu ft per day, and the company estimates that some 1m cu metres could be produced there before the end of 2010. The fields are estimated to contain a total of 30trn cu ft of gas.

These recent developments in the gas segment are set to support innovations in oil extraction. Though not a permanent solution, as oil and gas resources are still finite, the ability to utilise EOR to obtain petroleum has enabled Oman to revitalise its energy sector.

THE EOR ROUTE1980s: Oman’s earliest EOR experiments began with hot water injection at Qarn Alam and polymer injection at Marmul

2004: Occidental Chemical developing Mukhaizna field with steam thermal to produce 150,000 bpd by 2012, up from present 100,000 bpd

2005: PDO signs agreement with Petrofac to develop Harweel facilities with miscible gas injection – 18,000 bpd of production came online

2011: PDO’s Qarn Alam field to become world’s first full-field steam injection EOR project – to produce 30,000 bpd for next three decades

EOR RETURNS: Oil exports grew 7.4 per cent in 2009 and 8.7 per cent in 2010 Q1

Oil production expected to increase to between 850,000 and 900,000 bpd in 2010

Once you sit inside the Re-nault Fluence, it surprises you as ‘a big car in its class’, thanks to its en-hanced length and wheel-

base. In the cabin, the airy facia design incorporates taut, uncluttered lines that are complemented by the sweep of the dashboard trim strip. Essential driving functions and useful accessories are lo-cated at a comfortable distance. These are purposely concentrated around the steering wheel and centre console with a view to freeing up as much space as pos-sible and to make the car user-friendly.

Dynamic handling The chassis delivers an efficient, com-fortable and enjoyable ride. The saloon combines steering and handling preci-sion with minimal noise and vibrations. Fluence’s front suspension features MacPherson-type struts with rectangular lower arms, while the rear incorporates a programmed-deflection flexible beam. The car also sports an effective braking system, with large discs that provide both stopping power and durability. The electric power steering combines precise driver feedback with quick, accurate response to instructions from the wheel. It is easy to use and feels completely natural.

Fluence’s 1.6 16V 110hp comes with a class-leading CVT with manual mode. Is-sued from the Renault-Nissan alliance, this first-in-class gearbox brings together sobriety, performance and fluidity. CVT technology helps maintain a constant driv-ing regime without jolts during accelera-tion. Engine power is thus optimised with lower fuel consumption.

Comfort factorThe Renault Fluence offers lavish boot space, more passenger space than other cars in its category and extra elbow room at the front and the rear. Apart from this, the Fluence comes with an ergonomi-cally sound driving position. Its dashboard features elegant, flowing lines and all its key functions are easily accessible while driving -- these include controls for the navigation and climate control systems, the steering wheel-mounted radio and tel-ephone fingertip remote controls and the controls for the cruise control and speed limiter, the driver’s seat has a huge range of adjustment for a comfortable drive.

The step-up is visible in cabin details such as the chrome finish applied to door handles, instrument surrounds and gearlever knob, as well as the availability of a choice of either light- or dark-hued

leather upholstery. Particular attention has been paid to the decorative trim to create a varied range of distinctive ambiances, and to also distinguish between different equipment levels.

The rear seat can be folded 60/40 and the cabin features a lot of stowage space, a climate control system with front and rear vents is standard, even on entry-level models, with automatic dual-zone climate control available as an op-tion. All this apart, there are a range of optional, user-friendly, high-tech features like hands-free entry and ignition card with automatic locking of the doors as the card-holder walks away from the ve-hicle, Bluetooth® telephony and ‘Plug & Music’ digital connectivity.

Renault has a tradition built over 100 years of motoring passion. As Europe’s largest-selling brand, Renault has also earned a formidable reputation for leadership in safety – with as many as 11 models hav-ing the highest 5-star Euro NCAP rating for safety performance. The brand also offers the optimum blend of performance that is refined on the most competitive racing circuits, cutting-edge European design, as well as class-leading cabin space and value for money.

RENAULT CARS ARE KNOWN FOR THEIR BUILT QUALITY AND SAFETY, BUT THE FLUENCE SURPRISES ONE WITH ITS COMFORT

AND HANDLING. AN OER REVIEW

A CLASS A CLASS LEADERLEADER

AUTOTALK

SPECIFICATIONS

Engine:Displacement (cc): 1598Max Power (hp/rpm): 110Max Torque (kg.m/rpm): 15.9

Body TypeExterior dimensions: 4620 x 1810 x 1476Wheelbase (mm): 2700Seating: 4+1

88 September 201088

Jaguar has launched the all-new XJ in Oman. Sleek, sporting and sophisticated, the new XJ brings a daring new spirit to automotive luxury – it offers a seductive mix of striking design, breathtaking performance and engineering without compromise. Building on the success of the new XK and XF models, the introduction of new XJ is a

landmark for the revitalised Jaguar brand. Distinguished by unique exterior and interior design features, the XJ includes, an innovative new panoramic glass roof, an integral part of the XJ’s design concept, enabling the car to have a lower, more streamlined roofline, while dramatically enhancing the feeling of light and space inside.

The quintessential Jaguar

Elegant VW PhaetonVolkswagen has further perfected its flagship Phaeton, one of the world’s highest quality and most exclusive saloons available in the Middle East. The entire front end was redesigned, including the standard bi-xenon headlights with LED cornering lights. An abundance of new technical features are making their way into the vehicle. They include a new brake system, the Dynamic Light Assist

(camera-based, dynamic main beam control) system being introduced in a saloon for the first time, and a navigation system, which can integrate online data in the map display upon request.

Super performance series

British luxury sports cars brand Aston Martin has opened a new showroom in Muscat signalling the company’s first dealership in Oman. With Al Muhannad Al Hashar, Aston Martin’s Oman showroom located in Al-Sarooj district, the total number of the company’s dealers in the GCC rose to seven. Al Hashar Sheikh Al Muhannad bin Saeed Al Hashar, chairman of the board of Al Muhannad, Sultan Bin Surour Bin Mohammad Al Kharousi, CEO of Al Muhannad, and senior officials of Aston Martin attended the ribbon-cutting ceremony. Dr Ulrich Bez, CEO of Aston Martin, said that this was the right time for the launch in Oman with strong local demand for luxury sports cars.

Aston Martin’s first dealership in Oman

As the car buying season approaches, OTE Group, the exclusive distributor of Subaru range of vehicles in Oman, has launched its Super Performance Series of cars in Oman. High quality cars such as STI, WRX, Legacy GT Turbo and

XV are available with great offers during the season. Customers buying Subaru 2010 model vehicles can avail Free Service and Free Warranty for 5 years/100,000 kms. Subaru brand of cars are manufactured by Fuji Heavy Industries (FHI) Japan.

89September 201089

Japanese Suzuki Sx4 sedan is now available with additional value on all variants at no extra cost. In addition to having the pleasure to drive and own a car that is par excellence, the customers will be entitled to a number of free benefits such as free insurance, 100,000 km service for over five years as well as complimentary

registration on all models. AAA-roadside assistance is also available free of cost. To top it all, each purchase will include a Samsung LCD TV for the family. The SX4 Sedan is available at Moosa Abdul Rahman with the option of two power trains, the 1600cc on two variants, the GLX & GLX “Special” Models and the 2000cc.

Biggest offer of the season

The all new 2011 Hyundai Sonata has added yet another accolade to its resume by winning Gulf Autos’ 2010 Car of the Year Award, in recognition to its daring, emotionally-driven design, state-of-art technology and superior built quality. Gulf Autos’ Award honours the pioneering automotive achievements and innovative efforts spearheaded by leading car manufactures in the Middle East. “The Sonata’s new ‘look and feel’ is the result of 4

years of design development whose inspiration comes from nature,” said a senior Hyundai official upon receiving the Gulf Autos Car of the Year Award in Dubai.

Hyundai Sonata bags Car of the Year award

Unmatched ownership experience

In the Le Mans Series, the fight for the title could soon be decided. With a victory at the 1,000-kilometre race on August 22 at the Hungaroring near Budapest, Porsche works drivers Marc Lieb (Germany) and Richard Lietz (Austria) could settle matters and be celebrated as GT2

class champions before the season finale at Silverstone. The title defenders, who took off into the season with two victories and also won the Le Mans 24 Hours, take up the inaugural race of the Le Mans Series in Hungary at the wheel of the Felbermayr-Proton Porsche 911 GT3 RSR.

Porsche pilots to settle matters

Towell Auto Centre launched four new dazzling models of Mazda simultaneously at both their showrooms in Azaiba and Wattayah on a single day. The super cool Mazda2, the super sleek turbo charged 4x4 Sports Crossover CX-7, the super chic and luxurious CX-9 and the super spacious Mazda6 offer a sporty feel

and stout engines, all without compromising the ability to seat comfortably.Having a network of 14 service outlets and 10 parts outlets spread across the Sultanate, Towell Auto Centre is the only Mazda distributor in the world to win the Mazda Customer Service award four years in a row.

The flagship SUV of the all-new 2011 Infiniti QX was unveiled in the Sultanate by Suhail Bahwan Automobiles recently. The Infiniti epitomises the highest level of luxury not just for the driver and front seat passenger, but all occupants as it offers each one personalised control over the environment. Add to it an exceptional driving experience provided by a powerful and efficient V8 engine design,

Hydraulic Body Motion Control system and intuitive functionality. The 2011 Infiniti QX’s design is dynamic and its size is capable of transporting up to eight adults and their belongings with spacious elegance. The bold front chrome grille is flanked by automatic on/off bi-functional xenon headlights with windshield wiper interlock and integrated front fog lights. Supercharged Mazda models

90 September 2010

Nelson’s is a remarkable story. He grew up close to Ben Hogan and both men caddied at the same golf club. Where it was said they squared

off for the club’s caddie championship in 1927, with Nelson winning.

Although Nelson turned professional in 1932, it would be five years before he won his first Major, the US Masters Championship. To confirm his arrival, he was selected for that year’s Ryder Cup squad.

While the pre-war period was good to Nelson, his career really took off during the war. While Hogan and many of the other top professionals were sent off to war, Nelson was forced to stay home because it took his blood 13 minutes instead of two to congeal. During the 1940s, he played in 133 tournaments and was in the money list in every one of them. At that time that meant the top 10. He had 11 consecutive wins in 1945 and won the PGA Championship. He was also that year’s leading money earner.

Starting in 1942 and ending in 1946, Byron Nelson finished in the Top 10 in 65 consecutive tournaments. Over that full time period, Nelson finished out of the Top 10 only once, winning 34 times and finishing second 16 more times.Nelson’s 1945 season is the best ever by a male golfer. He won 18 times, including 11 tournaments in a row. He did it with a 68.33 stroke average that was not bested for another 55 years.

Nelson was among the first of a new generation of players who developed a full swing with increased leg drive leading the downswing; this is the forerunner of modern golf technique as practiced by top

FORERUNNER OF MODERN TECHNIQUEByron Nelson is mostly remembered for having won 11 consecutive

tournaments and 18 total tournaments in 1945

GOLFUPDATE

players, right to the present day. Nelson is sometimes credited as being the father of modern golf swing. He refined the changes for a couple of years, and then took his game to the highest level of competition, the PGA Tour.

The story goes that his wife suggested that he played goal in order to raise the money to buy their own ranch rather than touch their savings. Nelson achieved that goal in 1946. He played his last tournament in 1955 to be a rancher, later becoming a commentator and lending his name to the HP Byron Nelson Championship, the first PGA Tour event to be named for a professional golfer.

In 1974, Byron Nelson received the Bob Jones Award, the highest honour given by the United States Golf Association in recognition of distinguished sportsmanship in golf.

TOUR VICTORIES – 54

Major Championships – 5

Masters: 1937, 1942

U.S. Open: 1939

PGA Championship: 1940, 1945

Awards and Honours

Member, World Golf Hall of Fame

Associated Press Male Athlete of the Year, 1944 and 1945

PGA Tour Vardon Trophy winner, 1939

PGA Tour leading money winner, 1944, 1945

Member of 2 U.S. Ryder Cup teams

Captain, U.S. Ryder Cup team, 1965

92 August 2010

Maintaining its quality standards, three students from Polyglot Institute Oman were reported among the best performers in Middle East in ACCA examination held during last year. Zarnab Baig achieved the top score in her ACCA F5 (Performance Management) paper. Asma Aslam and Merzia Vajid topped in Certified

Accounting Technician (CAT) papers T10 (Managing Finances) and T7 (Planning, Control and Performance Management), respectively. Now having completed their CAT studies both, Asma Aslam and Merzia Vajid are progressing their ACCA professional qualification at the same institute.

Polyglot students excel in ME ACCA examination

The Al Sawadi Beach Resort organised a beach cleaning programme in order to contribute to the environmental cause. The staff of the hotel, including the GM and all managers, pulled up their sleeves and joined in the cleaning drive. The beach cleaning programme was an initiative by Gerrit

Schneider, GM, who is also planning to make it a monthly activity. The beach cleaning drive is just one of the many campaigns planned by the hotel for the coming months. The programme was aimed giving a message to all saying rubbish can be recycled but not nature.

Al Sawadi Beach Resort goes eco-friendly

KIMS Oman Hospital adds cardiology, gastroenterology

Volunteer employees with Nawras Goodwill Journey 6 travelled across the Sultanate, delivering the company’s assistance to those most in need. The latest thoughtful donations took place at Duqm’s social development centre in Al Wusta before team members move onto Salalah’s Al Wafa

Social Welfare Centre in Dhofar region. Commenting on his impression of the Goodwill Journey, participant Abdullah Ahmed Al Nabhani, from customer care at Nawras, said, “This kind of charity event is really valuable in our society because it teaches us the real meaning of giving and sharing.”

Nawras Goodwill Journey 6ends on successful note

KIMS Oman Hospital, Muscat, added super-specialties of cardiology and gastroenterology to its portfolio. At KIMS, it is a perfect amalgamation of world class medical equipment and highly skilled medical professionals drawn from various specialties. The cardiology department at KIMS is equipped with a full range of diagnostic and therapeutic facilities which includes

a 11-bed ICU with ventilator facilities, echocardiograph, treadmill, holter monitoring, ambulatory BP monitoring, electrocardiogram. The department of gastroenterology has facilities for diagnostic and therapeutic endoscopy which includes the latest, ultra-modern high-definition video gastroscope and high-definition video colonoscope.

Oman International Bank confirmed its constant and active participation in society and its contribution

in this holy month by donating RO100,000 in favour of Oman Charitable Association.

OIB donates to Oman Charitable Association

93August 2010

Lulu Hypermarket has opened its 80th outlet and 8th in Oman at Al Khaboorah. Spread over an area of 15000sqmt, the outlet will have an extensive supermarket section with fresh vegetables, fruits, butchery and delicatessen serving hot and ready-to-eat foods and special counters serving the best of bakes and cakes and special sections to promote Omani

products. The hypermarket also has a huge area dedicated for department store items like electronics, home appliances, furnishing and furniture’s and fashion brands for ladies, gents and kids. It also features a number of outlets including Omanmobile, Nawras, Top Note, Zahra Phones, Lulu Pharmacy, Money Exchange and Computer Shoppe.

Panasonic has launched a range of new technology within the unique Panasonic Panaboard UB-T880 Series. The interactive whiteboard offers an unparalleled working environment which allows display of the contents of a computer screen directly onto the board. This enables users to operate their own software applications for business presentations or school lessons. Available in the impressive 82” wide version, or the more compact 77”, the elite Panasonic Panaboard UB-T880 Series comes complete with a built-in amplifier which connects to USB speakers, built into two USB hub-ports and up to 3 finger touch.

The new series also provides simple video and audio data transfer through the unique wireless connection, all incorporated within the enhanced elite Panaborad software.

Lulu opens 8th store in Oman

Interactive Panaboard

In line with their continuous effort to provide highest level of protection to their customers, BankDhofar introduced Visa Electron chip card as a new secured way for payment.

BankDhofar launches visa electron chip card

BankMuscat picked the second jackpot prize winner of RO400,000 at a ceremony held as part of the Salalah Tourism Festival. Abdullah Mohammed Hilal Al Nabhani, an youngster who maintains an account at Mina Al Fahal branch, won the RO400,000 mega prize, while Batul Yusuf Master from Ruwi branch won

the monthly prize of RO40,000. Sheikh Salem Aufait Al Shanfari, President of Dhofar Municipality, presided at the grand prize draw attended by dignitaries, guests and senior BankMuscat officials. An enchanting operetta titled Al Mazyona’ punctuated the event at the Municipality Recreation Centre.

Youngster wins Al Mazyona RO400,000 grand prize BankDhofar, which is ranked as

the best bank in Oman in 2010, is the first bank in Oman to migrate their Visa Electron Card to chip and PIN technology. This technology will provide their customers with more security during their daily transactions as it requires the use of PIN for payments in different merchant outlets. The Visa Electron Chip card has a secret personal PIN code. The customer enters it in every shopping transaction in the same way as he or she withdraws money from the ATM machines.

Nuhas Oman was felicitated by Manal Bint Mohammed Al Abdwani, chairperson of Mazoon Electricity Company at a function held at Muscat Intercontinental Hotel recently for the unstinted and timely support extended to meet emergency requirements of cables in preparation following the recent

unstable weather conditions, to maintain uninterrupted power supply to the affected regions. Nuhas Oman, a leading cable manufacturer in Sultanate of Oman, is the first cable factory in the Sultanate whose quality systems have been certified by BASEC, UK to be ISO: 9001:2008 compliant.

Nuhas Oman commended for help in emergency

94 September 2010

DYNAMIC CARDIO WORKOUTTechnogym’s latest workout equipment Crossover provides complete upper and lower body training and ensures maximum glutes activation. An innovative machine for a total body workout, Crossover is easy to use and engages muscles that are not normally called upon by conventional machines. With its easy rear access and intuitive movement Crossover is an ideal training solution for all levels and types of workouts.

HYGIENIC KNIVESKhimji’s Luxury & Lifestyle division recently launched a new range of HACCP knives from Victorinox, the manufacture of the Original Swiss Army Knife. The coloured grips of the knives are aimed at boosting safety and hygiene. The first-class quality of the steel and optimum hardness ensures the best possible edge retention with a minimum risk of breakage. The non-slip Fibrox handles can be sterilised at up to 150 degrees Celsius making them ideal for use in the kitchens of hotels and restaurants

WATCH WITH DIFFERENT FUNCTIONSetamorphosis watches, the first project in TimeWriter series of Montblanc, combine the principles of traditional watch making with innovation. By moving a slide down or up, this timepiece changes from a wristwatch with hour, minute, second display to a chronograph and vice versa. The revolutionary transformation mechanism is based on the magnificent and handcrafted chronographe calibre MBM16.29

TOTAL ENTERTAINMENT Sony’s recently launched 3D-enabled Blu-ray Home Theatre Systems and Channel Sound Bars redefine the living room entertainment experience. The Home Theatre Systems BDV-IZ1000W and BDV-E970W can play 3D content from Blu-ray via the latest 3D-enabled BRAVIA HDTVs. The first all-in-one home cinema systems, the two models can play high-definition 3D content from Blu-ray Disc, and can also access a world of online video entertainment from the BRAVIA Internet Video platform.

HEARTS CAST IN GEMSThe BeHeart collection of Roger Dubuis jewellery is a voluptuous display of flowing contours. The delicately rounded heart in white or pink gold transforms into a precious jewel, presented in three variations. One is an all-gold variation, another set with a line of diamonds along the edge and a flamboyant third version entirely paved with diamonds. The rings may be teamed with a matching bracelet, pendant or earrings.

IPHONE APP AT YOUR WRISTOMEGA’s new feature-packed iPhone vividly presents the brand’s products, stories and retail locations. The time and date are attractively displayed on a screen image of an OMEGA De Ville Hour Vision watch. When the dial is tapped, the back of the watch appears on the iPhone. The automated operation of OMEGA’s revolutionary Co-Axial caliber 8501 can be seen through the watch’s sapphire caseback, which is perfectly re-created on the screen of the iPhone.

96 September 2010

TOWARDS A BETTER TOMORROWPark Inn hotel recently won an award for their

green activities. This is a testament to the efforts

being put in by various organisations in Oman

to go green. A report by Susmita De

ENVIRONMENT

Aprogressive step towards a better tomorrow, Green Technology is gradually gaining ground in the hospitality sector of Oman.

Already implemented in European countries, the idea is catching up in this part of the world. Recently, Park Inn Muscat was certified as having met the requirements of the Green Globe Standard. First in Oman, and second in the Middle East region, the hotel, a part of the Rezidor Group has earned the Green Globe seal of approval which stands for the highest quality in sustainable practices within travel, tourism and allied industries across the globe. Recognised by travellers, Green Globe is associated with companies who strive to upgrade their immediate

Sushant Pawar, Chief Engineer, Park Inn Hotel

environment through energy saving, recycling and waste minimisation. The four basic criteria for ensuring best performance are sustainable management, corporate social responsibility, conservation of cultural heritage and environment.

Responsible businessSituated in the heart of the capital city of Muscat, Park Inn, with its soothing facade and vibrant interior, attract travelers from all over the world. It enjoys a good reputation amongst the business community for its spacious meeting rooms and splendid living quarters. There is also another reason for its popularity -- its environmental performance.

“This is what is called Responsible Business,” says Sushant Pawar, chief engineer, Park Inn Hotel. He further explains, “Every company has corporate social responsibility. We named it Responsible Business. It is all about doing business while taking responsibility for the welfare of the community. One way of doing it is by striving to reduce the negative impact on environment.” Pioneering the green cause, Pawar has initiated effective green measures within the Park Inn premises, which has helped Park Inn in clinching the award.

One of them is monitoring the conditions of the vehicles of the vendors every month whose products Park Inn purchases for consumption. As for its water policy, it is the first hotel in Oman to have installed faucet aerators in all its guest rooms, public toilets, showers, taps, on which it is making around 12 per cent saving on overall water consumption. The safety of drinking water is ensured by a regular monitoring done by the municipality. Salt is now used for swimming pools

instead of chlorine, which is not always suitable for skin.

To make it energy efficient, Park Inn has also replaced the normal spotlights with LED lights, thereby reducing energy consumption considerably. The building itself has eco-friendly materials like the green ply. For waste management, the hotel has initiated paper recycling through a local company. Going beyond its immediate premises, Park Inn has involved itself in beach cleaning. Planting saplings features among the green initiatives in the coming months. In compliance with local legislation and regulations, Park Inn is doing the needful for the green cause.

Out of 248 standards, it is mandatory for a company to achieve 51 per cent of these to be certified by Green Globe. Park inn has gone beyond this limit and achieved 75 per cent of compliance, which is the second highest in the region. Green Globe is a US-based certification body which has accredited auditors in every region who verify the documents online.It is a third-party verification in line with ISO 19011 standards for auditing sustainability management systems.

To meet the specifications of the certification and fully understand the extent of the job to be done, Park Inn

management had to strive to train its personnel in environmental concerns. Mobilising fund was not difficult as it involved no major investment, though changing the behavioural pattern of people was time-consuming.

To keep the good work going, it is important to assess the level of customer satisfaction, which is often a pointer to the hotel’s environmental performance. Park Inn takes the help of an online process called Middealia, whereby a guest logs on into the website as he checks out and gives his feedback on his stay in the hotel. That acts as an alert, through which customer dissatisfaction can be taken care of. In Europe where the green awareness is at a higher level, a survey shows that customers have preference for green hotels even at higher prices. In Oman’s tourist initiatives, going green can obviously prove beneficial for the hospitality sector.

Collective responsibility“Protecting the environment is a collective responsibility. Other hotels in the city are also trying to get Green Certification, though in Oman we need more awareness for the Green cause,” says Pawar.

Francois Galoisy, the general manager of Park Inn, who has supported the new measures, is hopeful of the new trend in Oman. He says, “This certificate is going to help our tourism initiatives. We would like others to follow the same step. Oman’s scenic beauty is a definite crowd-puller. But on top of that if our business is clean and our operations are sustainable, it will tell the world that we are respectful of our environment. Oman can surely become a responsible green destination for travelers and tourists.”

MB HOLDING COMPANY LLC

Vince Cable’s The Storm: The world economic crisis and what it means

raises a pertinent question: “Supposing that monetary and fiscal policy fails: what then?” This has already been answered by the authorities in the same terms as Cable suggests. They have resorted to “printing money”, the policy we now know by the unlovely term “quantitative easing”. The question that looms now is what happens if that, too, fails. To that there seems no answer, not even from Vince.

Still, Cable’s little book is well worth reading. It is probably the best book you can read to understand what on earth is going on out there, and does the sort of job that those blood-red Penguin Specials did decades ago. For the intelligent layman, it chronicles complex events as it explains them, pulling in just the right amount of wit, history, anecdote and theory along the way.

Ringside viewThis former chief economist at Shell probably devotes too much attention to the oil market and not enough to the coming water crisis (the only serious blind spot in his global vision). Thus Hayek, Malthus, Keynes and Marx are interwoven with Northern Rock, Fannie Mae, Freddie Mac, the South Sea bubble, Opec, the Doha trade talks,

CRISIS KNOWLEDGE

THE BOOK IS A MUCH BROADER TOUR OF THE CONTEMPORARY ECONOMIC SCENE THAN JUST AN ACCOUNT OF THE CREDIT CRUNCH. A REVIEW BY

GANESH SUNDARARAMAN

BROWSINGCORNER

manufactures created the conditions for lower inflation and low short-term interest rates, the vast accumulation of – mainly – Chinese foreign exchange earnings manifested itself in the purchase of US government bonds, keeping down long-term interest rates.

Nicely put, and Cable rightly wonders aloud how it came to be that the Chinese, where a billion still live on a dollar a day, came to be lending the West money to buy Gucci and BMWs and generally have a huge party. Uncomfortably for us, Cable shows how “the British economic miracle of recent years has been exposed as structurally unsound”.

It is difficult to argue with Cable’s conclusions: that the idea that property ownership as a one-way ticket to prosperity and a pension has been “a lie”; that foreign ownership of UK economic assets such as the car industry and the utilities does matter; and that neglect of manufacturing and skills have left us in an economy where “only Polish immigrants know how to repair leaking pipes and lay a brick”.

Cable brings a breadth of view and lightness of touch to otherwise impenetrable subjects. The author is too modest to point out that the economic storm engulfing us is a “financial super storm of great destructive power”.

Mervyn King and the rise of China and India to economic power, or the “awkward newcomers” as The Storm characterises them. Cable’s

gift is for the succinct causal explanation, such as this on how China’s emergence and export drive lie at the root of the crisis: “While cheap

The publication featured in Browsing Corner is provided by WHSmith Bookstore

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Cut out this coupon from OER and present it at the WHSmith’s bookstore

in Jawarat Al Shatti to claim a 10% discount on the book featured in the

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BEYONDBOARDROOMS

99July 2010

Sahar Askalan, Principal of Sahar Askalan Legal Advocacy and Consultancy has

major plans for her firm. “Our vision is big, this is just the beginning, we want to be an Omani law firm that is international, to enhance the stature of Oman legally. The journey of the million miles start with a one step.”

Askalan has studied law in London at the BPP Law School. She later did her legal training at Allen and Overy and Theodore Goddard (now known as Addleshaw Goddard). Askalan then moved to Paris to work with Clifford Chance. She shifted bases yet again by moving to Abu Dhabi to work for Richards Butler (now Reed Smith Richards Butler).

Taking chargeA project finance specialist Askalan felt that it was time to come back home after 16 years abroad, “As an Omani

I thought it is important that I come back and give back to my country.” Coming back to Oman in January 2007, she worked for different reputable entities before setting up her own firm on April 12, 2009.

Looking back she says, “It has been almost a year and a half and it has been a challenge. In any business it is never easy, if one thinks that it is going to be a smooth ride then one is mistaken, one has to work hard and be consistent in the standard of work that one provides and that’s our aim.” Starting with two lawyers, the firm now has a six member legal team and three support staff. The firm has built up an impressive array of clients in a short span.

“I have never had problems with government bodies and clients, but I have had issues with some of the male lawyers. Once they get to know that I am not busy shopping everyday then they

have a problem. A number of them joined thinking that they will be running the show, but once they find that I am a hands on attorney they get uncomfortable and leave one way or the other. After some teething problems I have now established an amazing team with extensive legal experience, in which we work together and learn from each other.”

She is grateful that she has an extremely supportive and understanding husband, a dad who is well experienced and willing to lend a helping hand and a mom who is there for her. “I call the three of them my triangle of support,” she says.

Working abroad I learnt that efficiency is the key, in addition one has to be on time, practical and to the point. Her advice to women is simple, “keep going and do not let anyone stop you, do not be put down by others negativity.”

Sahar Askalan, the first women to start a legal firm in Oman is now aiming to build it up as an international Omani firm. Mayank Singh reports

Sky is the limit

EducationBoston University and BPP Law • School

Work experienceAllen and Overy, Theodore • Goddard, Clifford Chance, Richards Butler, SASLO and Omran

Advice for womenLearn about your legal rights•